Card Factory PLC (LON:CARD) continued to forge ahead with its store opening programme as sales growth picked up despite headwinds from negative high street footfall in the first quarter of its financial year.
The FTSE 250 greeting cards and gifts retailer reported total growth of 6.4% in the three months to 30 April, with like-for-like (LFL) sales up 2.3% compared to the 3% and flat LFL sales seen last year.
READ: Card Factory delivers lower earnings in full year but forecasts special dividend at interims
One blot on the copybook was the trading performance of its Getting Personal personalised gifts and cards unit, which continued to be hit by heavy discounting in the market and increasing costs of customer acquisition.
Cash generation across the group was however said to be strong, although net debt, before the proposed £21.9m payment of a final dividend, had risen to £151.3mln at the end of April from £141.3mln at the end of January and £147.7mln a year ago.
This was likely to reflect the 14 net new openings in the quarter that took the total estate to 979 shops by the end of the period and left Card Factory “on track” to add a net 50 stores over the financial year.
In a statement issued ahead of its annual shareholder meeting on Wednesday, Card Factory's management acknowledged that the improved group sales performance partly reflected weakness in the comparative period in 2018 but still felt it was an encouraging start, with record card sales in volumes and value for both Valentine's Day and Mother's Day.
Caution reigns
Considering the uncertain macro outlook and continued challenging consumer conditions, chief executive Karen Hubbard said she expects LFL sales for the year to be “marginally positive”, with full year profit expectations remaining unchanged as cost headwinds decline.
Broker Peel Hunt said the trading statement was "ahead of hopes", but noted that management was cautious about the balance of the year and there are no changes to forecasts today.
"It is clear, however, that since the period end (ie, May) things have been tougher, hence the guidance to zero/slightly negative LFL for the rest of the year. Some cost savings may be slightly delayed too."
Analysts said the shares were not expensive, "but our nerves persist regarding industry dynamics, and whilst this is a strong market leader, finding forecast momentum will continue to be tough".
Shares in Card Factory were up 3% in early trading on Wednesday but were flat by the afternoon.
-- Adds broker comment and share price detail --