Card Factory has reported higher half-year revenue despite continued pressure on UK consumers, with a surge in digital sales and international expansion helping to offset weaker trading across its core high street stores.
The retailer, which operates 1,126 shops across the UK and Ireland, said group revenue rose 5.3 per cent to £260.8mn in the six months to July 31 compared with the same period a year earlier.
Adjusted pre-tax profit, however, edged down to £12.7mn from £13.2mn, as the company navigated subdued consumer spending and investment in its wider growth strategy.
Darcy Willson-Rymer, Card Factory’s chief executive, described the first half as “further progress” in its efforts to build a broader and more diversified business across the gifting and celebrations market.
“Despite continued pressure on the UK consumer, group revenue increased and profitability remained broadly flat, with improved store profitability and disciplined working capital management delivering strong free cash flow,” he said.
The performance highlighted the growing importance of Card Factory’s digital operations. Digital sales increased by £12.8mn during the period, helped by the £24mn acquisition of online gifting business Funky Pigeon from WH Smith in July.
The deal is intended to strengthen Card Factory’s online presence and complement its extensive physical store network.
The digital growth helped cushion weaker performance from the group’s main stores business, where revenue declined 0.7 per cent during the first half.
Like-for-like store sales fell 2 per cent, although the decline was partly offset by the opening of 23 new stores over the past year.
The performance was stronger in the Republic of Ireland, where store sales increased 24.3 per cent year on year as Card Factory continued its expansion programme.
The company said it had also seen signs of improvement in the UK following the end of the reporting period. Management said it had been “encouraged by trading” since July 31, with UK like-for-like store sales returning to growth in recent weeks.
The update comes as retailers continue to contend with cautious household spending, with consumers facing pressure from higher living costs and a more challenging economic environment.
Card Factory is seeking to offset those pressures by expanding its presence beyond traditional greeting cards and into the broader celebrations market, while increasing its digital reach and international operations.
“We remain focused on strengthening our store estate and increasing our share of the celebrations market,” Willson-Rymer said.
“During the first half, we continued to optimise our stores and space, strengthened our value proposition and rolled out our new party range.”
He added that the company’s partnerships and international businesses were “broadening our reach and creating further opportunities for growth”.
“The ongoing development of our partnerships and international businesses are broadening our reach and creating further opportunities for growth, and the integration of Funky Pigeon and delivery of the expected synergies remain on track,” he said.
Investors responded positively to the update, with Card Factory shares rising 2.5 per cent to 74.5p.
The figures leave the retailer balancing two contrasting trends: softer demand across its established UK store estate, and growing contributions from digital operations, new stores and overseas expansion.
For Card Factory, the ability to convert those newer sources of revenue into sustained profit growth will be central to its efforts to build on the progress reported during the first half.
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