Good morning, it's Paul here.

Apologies, I ran out of time & mental bandwidth yesterday afternoon, and couldn't finish the section on VP Group.

7-8am quick views

Card Factory (LON:CARD)

Q1 trading update

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, announces a trading update for the quarter ended 30 April 2019 to coincide with its Annual General Meeting to be held later today. 

I reviewed the most recent accounts (FY 01/2019) here, concluding positively that this is a highly cash generative, good quality business, paying excellent & sustainable (in my view) high dividends. Stockopedia's computers like it too - a high StockRank of 94.

Key points are self-explanatory;


Weak prior year comparator period - how refreshing to see a company be honest, and admit this in an RNS. This boosts my level of trust in management.

  • Total 979 stores - must be nearing saturation in the UK? Maybe not, as 50 new stores planned for this year
  • - good start to the year (no figures given)
  • Getting Personal - still struggling
  • Net debt of £151.3m up 2.4% on a year earlier

Outlook comments sound reassuring;

Card Factory has seen a positive start to the year.  Considering the uncertain macro outlook and the continuation of challenging consumer conditions, and with the key trading periods still to come, the Board expects LFL sales for the year to be marginally positive, with full year profit expectations remaining unchanged....
"Overall, Card Factory remains in a strong position, continuing to grow market share, with lessening cost headwinds and a platform for medium term growth." 

My opinion - it's clearly doing something right, to be generating positive LFL sales, in an environment of falling shopper footfall (although that's likely to stabilise at some point, we just don't know when).

I particularly like the comment about "lessening cost headwinds"

Valuation - at 193p currently, the PER is just over 11. That feels good value, for a robust business paying a big divi yield. Although how much upside is there, given that earnings have been falling in recent years? EPS was c.20p in 2015-2018, but now seems to have settled around 17p (2019 actual, and 2020-21 forecast).

The main reason to hold…

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