Card factory back on the rise

Tuesday, Apr 05 2016 by
5

They had a strong trading update today

Card Factory make amount of money selling absurdly cheap products. Some of its cards go for 29p. Card Factory makes nearly all of its own cards. With no middleman taking their cut – and ramping up the prices – Card Factory can sell its stuff for a fraction of the price of competitors.

Full year pre-tax profits at greeting card maker Card Factory almost doubled to £83.7m driven by strong sales and new store openings.
Revenues were up 8% to £381.6m, with sales at the Getting Personal online unit up 7.5%.
Underlying earnings per share rose 17.2% to 19.1p and shareholders will be rewarded with a final dividend of 6p a share, up from 4.5p.

Analysts expect its opening about 50 stores a year, which has taken it to 800 locations across Britain. Its goal is to get to 1,200p so they expect a 45% rise



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Card Factory plc is a specialist retailer of greeting cards, dressings and gifts. The Company operates through two segments: Card Factory and Getting Personal. The Card Factory segment retails greeting cards, dressing and gifts in the United Kingdom through a network of stores. The Getting Personal segment is an online retailer of personalized cards and gifts. Its physical store network operates in three areas: single cards, non-card items and Christmas box cards. Its single cards include individual cards for everyday occasions, such as birthdays, anniversaries, weddings, thank you, get well soon, good luck, congratulations, sympathy and new baby cards, and seasonal occasions, such as Christmas, Mother's Day, Father's Day, Valentine's Day, Easter, thank you teacher, graduation and exam congratulations. Its non-card offerings include gift dressings, small gifts, party products and other non-card products. The Company operates through a chain of approximately 800 Card Factory stores. more »

LSE Price
192.3p
Change
1.2%
Mkt Cap (£m)
648.9
P/E (fwd)
10.6
Yield (fwd)
7.9



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14 Posts on this Thread show/hide all

lucien2k 5th Apr '16 1 of 14

I guess never underestimate people's desire to spend their money on tat.

My question would be, how sustainable is it? Most young people I know just send a facebook message rather than buying a card. It tends to be something for older generations.

Will this hurt them in the long term?

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vik2001 5th Apr '16 2 of 14

In reply to post #126194

I disagree. FB or even text messaging will never replace the personal touch giving someone a card on a special occasion. only time I would FB or text is if Im not close to someone or they live to far away.
theres obviously a demand which is why Pre-tax profits hit £83.7m in the year to January 2016, up from £42.7m in the previous 12-month period.

The fact also they make the cards themselves gives them a edge over competitors, and with drive of online sales they should continue to do well. I see a lot of upside yet to come with them.

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lucien2k 5th Apr '16 3 of 14

I don't disagree that there is a place for it. Question is whether their market will start shrinking due to changing demographics and disruption (Moonpig etc).

They obviously have an advantage over companies like Clintons because they focus on their own stock. Hard to argue with the numbers they are showing too, online growth has been huge for them.

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herbie47 5th Apr '16 4 of 14
1

In reply to post #126194

Its not tat, its cards that would have cost you considerably more in other shops before Card Factory came along. Their shops are often very busy, problem is many are too small at busy times, like mid December. My concern is the growth seems to be over, 50 new shops after 800 already open does not sound like much growth, as prices are cheap there maybe some room for higher margins?

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janebolacha 5th Apr '16 5 of 14

I still buy cards for family members and for close friends, as well as for older acquaintances.
I also use e-cards, quite a lot and for all kinds of occasions, really because people like receiving them and I like sending them.
For that I use the Jacquie Lawson site (worth checking out), from where I can send an unlimited number of cards for only about €10 a year.
So the use of e-cards is perhaps expanding the market and not replacing the "real card" market.
Well done, Card Factory, for succeeding where Clinton Cards failed!

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vik2001 5th Apr '16 6 of 14

In reply to post #126212

50 shops is not much I agree for growth, but its the presence of their online shop which they are counting onto push further growth up. but how much this can do will be limited.  the new chief exec job will be how to use existing profit to find further upside. 

read somewhere analysts are predicting 40-50% upside yet to come on the share price.



on another note epwin group and JD is another one which should see their share price rise much further this year. JD results are out next week.

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herbie47 5th Apr '16 7 of 14

In reply to post #126230

Not sure about online for ordering cards.

The 45% growth you mentioned is over the next 8 years? If EPS is only up 17% but profits doubled then presume more shares were issued?

Why will Epwin (LON:EPWN) shares rise much further?

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vik2001 5th Apr '16 8 of 14
1

quickly in regards to epwin it plays into two long-term trends in this country.

first people are moving away from DIY to getting someone in. Second, construction firms are increasingly keen to use as few labourers as possible on jobs to drive down costs.
Most of Epwin’s products are the stuff that contractors dream of – porches, chimneys, decking and dormer windows that can be attached to a property with the minimum of graft and left there happily for years. They do not last forever though.

The peak period for refurbishment was around 2004 and 2005 and many of those products need to be replaced now and in the coming five years.
The way they going to deliver growth is much earlier they combined with latium . Combining the two companies has helped to cut costs significantly and they are still finding ways to improve profit margins and to make the group more efficient.
The business also has plenty of cash in the bank, so it has made two acquisitions since it floated – Ecodek, which makes decking from a composite of wood and recycled plastic milk bottles, and earlier this year, Storm-king, a leading supplier of fibre-glass items such as dormers, chimneys and roofing for bay windows.

These deals have extended Epwin’s product range and given it access to new technologies. Further ranges are likely to follow to improve earnings.  I even read somewhere they are doing chimneys not made out of bricks, but some new material which will be a dream to install for builders.

2015 results will be announced in a couple of weeks and expect to see a 10 per cent increase in profits and a div rise.

JD Sports speaks for itself, and that I believe in a couple of years will end up in double digit growth

I don't hold shares in epwin

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vik2001 5th Apr '16 9 of 14

In reply to post #126242

Their online presence is not just for ordering cards . Card Factory relaunched its main website during the year, pushing online sales up 22.8pc. Meanwhile Getting Personal, its online store for personalised gifts, enjoyed a sales boost of 17.5pc, where you can buy everything from personalised doormats to glasses cases . 

I think they will probably make some smart acquistions at some point to help growth also.

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herbie47 5th Apr '16 10 of 14

In reply to post #126254

Thanks for that, thats is the micro climate view but what about the macro climate, I feel housebuilding is near the peak of its cycle, if there is a global slowdown or recession which looks increasing likely they will be affected. I'm reducing my exposure in this sector. Will wait for Epwin (LON:EPWN) results but 10% increase in profits will not do anything for the share price.

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herbie47 5th Apr '16 11 of 14

In reply to post #126257

Ok thanks, maybe there is some potential there then.

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vik2001 5th Apr '16 12 of 14

In reply to post #126284

your correct housebuilding is at the peak, and epwin could be affected at this peak to an extent. but there is always demand for their products when doing repairs etc which could be a bit of a saving grace to yet again "some extent"
I got out ages ago and am wondering if I should do the same for Inland Homes? any opinions on them? the posted positive results a few weeks back, but I feel edgy towards them now...

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herbie47 5th Apr '16 13 of 14

In reply to post #126290

I sold my Inland Homes (LON:INL) @ 87p a few months ago. I was concerned that the CEO sold 2.5m shares. I did not like that they delayed the full years results to include more sales, maybe that was to get the share price to rise? Although the latest figures looked quite good. To be honest I'm not sure, I'm concerned there could be problems, Brexit is the one, China is another. Maybe top slice if you have enough shares.

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vik2001 5th Apr '16 14 of 14

In reply to post #126302

I got enough shares, but they are all down at moment for me to topslice. I have mixed views.
I think there is scope for a substantial uplift in value over the next two years as it gains planning consent on its sites and realises value through a mix of disposing of sites to the larger national homebuilders and developing some themselves. But on the other hand all the other things can go against its value..

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