Card Factory PLC (LON:CARD) has seen a reduction in its first quarter like-for-like (LFL) sales for 2018, however the slowdown failed to impact expectations for the year and was accompanied by strong growth in online sales.
The FTSE 250 greeting card retailer said in a trading update that LFL sales for the first quarter had declined by 0.4% against strong comparatives and a tough retail environment, while group sales growth on a non-LFL basis was up 3% for the period.
READ: UBS posts an upgrade for Card Factory as it turns positive on growth prospects
However, the group added that revenues from its online offering, cardfactory.co.uk, had continued to grow strongly following a successful first quarter as customers responded well to range expansions and new designs across both card and non-card products.
Meanwhile, the firm said trading at Getting Personal, its personalised gift arm, had continued to be disappointing, faced with a market environment of heavy discounting and increasing customer acquisition costs.
Card Factory also said it remained on target to open around 50 new stores by the end of the current year, having opened 11 new stores in the first quarter.
The company also saw a £13.6mln reduction in net debt from January to £147.7mln from £161.3mln, higher than the £10.4mln reduction over the same period the previous year.
Karen Hubbard, Card Factory chief executive, said: "We have had a solid start to the year with further sales growth despite an ongoing sector trend of subdued footfall, which impacted the like-for-like performance.
She added: "Overall, Card Factory remains in a strong position as we look forward to the lessening impact of cost headwinds and the benefits of a significant number of business efficiencies being implemented during the year. This will put in place a platform for further growth in the medium term. The Board's expectations for the full financial year remain unchanged”.
In a note to clients, analysts at Liberum commented: “Q1 [first quarter] LFL sales (-0.4%) are a little disappointing, below management's historic target range. Total revenue growth of 3.0% is half the prior year growth of 6.1%. But cash generation has remained strong and the store rollout programme remains on track.
They added: “There are no changes to full year guidance but our analysis on the cash flow suggests we do not expect the special dividend to be toward the top end of management's guided range.”
Card factory shares were down 2.4% at 213p.
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