Following today’s release of Card Factory’s figures for FY2022/23; Tash Van Boxel, retail analyst at GlobalData, a leading data and analytics company, offers her view: “Despite an impressive start to the year, with H1 FY2022/23 sales up 69.4%, Card Factory’s total revenue rose 27.1% to £463.4m for the full year, amid a more challenging H2, as the cost-of-living crisis escalated, putting pressure on the sale of non-essential items. Store sales were up 31.3% for the period, driven by the development of its store portfolio, with like-for-like (l-f-l) store sales up 7.6%, as consumers returned to high streets in search of gifts and cards at lower price points. Yet, despite Card Factory exceeding its EBITDA forecast, ending the financial year at £112.0m, up 27.1% on FY2021/22, profits will remain under pressure as inflation continues to bite.
“Card Factory’s sales growth for FY2022/23 was driven by the expansion of its Everyday card range, for occasions such as birthdays and weddings, with l-f-l revenue growth of 20% and l-f-l volumes up 48% for its greeting card range. The permanent 3 for 2 offer on its greeting cards has been key to driving demand for Card Factory, as consumers look for ways to cut back on spending amid inflationary pressure on discretionary incomes. Nevertheless, Card Factory should be wary of the introduction of Clinton’s Essentials range, which will enable customers to trade down within the mid-market specialist and allow Clintons to better compete with Card Factory on price. Prioritising the expansion of its Everyday range will be vital for Card Factory to retain its reputation for appealing greeting card designs at low prices.
“However, Card Factory’s online fascia has continued to struggle, with cardfactory.co.uk’s sales down 18.8% on FY2021/22. Though the outlook for cardfactory.co.uk has improved since its last trading update, with sales up 8.8% since December 2022, its online division continues to be a thorn in its side. Investment in its online channel will be key going forward to ensure that its online operations do not weigh down its offline performance.
“Card Factory has entered the next financial year in a strong position, with the greeting card specialist reporting that sales were ahead of the board’s expectations in the first few weeks of FY2023/24. Indeed, Card Factory came out on top in the greeting cards division for both Valentine’s Day and Mother’s Day in 2023, according to GlobalData’s Mother’s Day 2023 and Valentine’s Day 2023 reports, as the value card specialist’s lower price points appealed to consumers shopping on tighter budgets. Looking ahead, Card Factory should maintain its focus on its offline channel, with continued investment in its store network, as well as global expansion through the recent acquisition of SA Greetings. This entry into the South African greeting cards market will be a new way for Card Factory to support growth levels, with the retailer able to increase its customer base and revenue, as well as pave the way for future partnerships in this market. However, Card Factory must not lose focus on its UK business, as enhancing and improving its online platform must not be forgotten.”
