I’m not a holder but found this Substack read interesting and know many pis follow Card Factory (LON:CARD)
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Hi GM,
I came across the same read, just the other day. It dates from Apr. '24, since when Card Factory (LON:CARD) has shot up, cratered and ended up pretty much where it was when the article was written.
But lots has changed in between times, budget, US acquisition, trading updates, etc.
I hold.
Regards,
Jon
Wow, he had 25% of his portfolio in Card Factory (LON:CARD) then sold the lot. Missed out on the 50% rise.
I do have a small holding, not sure whether to keep it or not.
Retail could be in for a tough time.
Their advantage is they produce the cards. Others have to buy them in, they even supply other retailers.
cheers gmrader - great article
Card Factory (LON:CARD)
strewth that alot of effort to come to the following conclusion
"i do not believe that card factory can pass on price increases and maintain margins"
this is such a simple business that this is the only question that really matters - if they individual is wrong presuming card factor cant pass on price increases then all their calculations and pretty much nonsensical.
dont get me wrong this is a great deep dive and its on lext level with regard to detail.
Thankfully if you presume this individual is wrong to presume thye cant pass on increases in costs - then the picture is more rosy than this person is predicting - thankfully the buisness model is that simple. They sell most of stuff through stores and simply need to maintain margins braodly speaking"
There is a middle ground here that the future margins wont be in downward spiral but will be at lower level than currently predicted - with cuyrrent cost increases its not silly to preume that they might have soem short term margin issues.
On the plus side if they are printing stuff for others there is hope even if margins are lower thereb is hope that other stuff can fill inthe blanks.
In summary brilliant article but this is super simple business and i ssupect "management" should be better placed to be able to work out future margins than this individual.
One slight worry here is that mangement have in the past flipped from been positive to negative in quick order and vice versa. So i do have slight niggle ref historical ability to forecast accuratly - i am probably going backa couple of years though when things were slight moree complex than they are now.
Note i am not far of agreeing with this commentator - i think they have said they have sold 25% of their holding. To me the fact anyone would not sell 100% suggests that they are still positive on this share. I have actually only just bought in for the first time - but for me its nota super conviction holding either - justa bit of abottom fishing gamble for business that is making decent profits and could pay debt down quickly if they wanted to. The clever people here were probbaly the ones that took the risk at 30p ish levels - i was slightly worried when they played hardball with the banks that there may be dilution and i wasnt 100% covinced profits would bounce back as strongly as they have done - probably to cautious - hey ho.
I came across the same read, just the other day. It dates from Apr. '24, since when Card Factory (LON:CARD) has shot up, cratered and ended up pretty much where it was when the article was written.
cheers for that didnt even realise this article was a year old - i dont think much has changed really though still the same issues that there are pressures on costs and that is alwaysa worry if its not obvious you can maintainm margins
I have just checked, to me still sounds like he sold out "In the process of writing a bullish pitch, I have conducted extensive modelling resulting in me changing my opinion and selling my 25% portfolio position. Whilst this investment might turn out well, I no longer believe there is a margin of safety if you follow conservative assumptions."
Re costs, their rivals will also have these increases, as well, maybe more so as they don't control the products, they are selling. Clintons already have gone bankrupt 3 times, I'm surprised they still exist.
Hi rmillaree, unless I am being dull, which is always possible I would suggest that a great deal has changed since last April, although I have yet to read the article referred to by gmtrader.
Card Factory (LON:CARD)
There is of course the looming challenge from the increase in NI and minimum wage that take effect in April and will impact all UK based businesses, especially retail and hospitality. Nonetheless Darcy Wilson-Rymer, CEO is confident that the company can absorb the resulting £14m additional costs and continue to improve earnings for FY2026. I have no crystal ball, but if one subscribes to that which is available in the market, the shares along with several other UK small caps are compelling cheap and the time to buy anything of value is when no one is interested.
As always just my view. I have a reasonable holding purchased at around the current share price.
All the best
