Card Factory is seeing customers return to the high street in the wake of the Covid-19 pandemic – giving it reasons to focus on the role of the store within an omnichannel business.
The retailer is preparing to trial a click and collect service at 84 shops, with the aim of having a full omnichannel service by its 2024 full-year. It is also experimenting with new store formats and locations. It has opened in central London for the first time through two trial shops and has so far taken a new model store format to five shops. Six new stores opened in the Republic of Ireland.
Card Factory’s strategy is to transform from a store-based card retailer into an omnichannel cards and gifts business. It is looking at ways of growing its business both through new markets – where it has identified potential opportunities in India and the Middle East – and by widening its range and expanding into new categories. Its Card Factory website will soon add flowers and alcohol, while the retailer has launched new ranges of licensed gifts and partyware.
About half the goods that Card Factory sells each year are bought in dollars, currently being affected by a sharp fall in value on foreign exchange markets. The retailer says that it currently has commercial hedging in place to cover 100% of its exposure for the rest of the 2023 financial year and for most of 2024.
The update came as Card Factory reported revenue of £198.0m in the six months to July 31 2022 – 69.4% ahead of the same time last year. Store revenues grew by 81.8% – or 6.1% in a like-for-like basis that strips out the effect of store closures – including more than two months of temporary lockdown closures – and openings. Online sales fell by a third (33.6%) year-on-year, but were 85.9% up on the same period in pre-pandemic 2019. Card Factory online sales of £4m were 29.8% down on last year, while Getting Personal online sales were 35.5% down on last time. Overall LFL sales were 4.1% up on last year reflecting, says Card Factory, the “good momentum within the business alongside the shift of customer spend back towards the high street and reversal of lockdown effects”.
Pre-tax profits of £14.3m represented a return to the black after a loss of £6.5m a year earlier.
Card Factory chief executive Darcy Willson-Rymer says: “We are pleased to report a strong performance through the half which reflects continued good momentum within the business, as well as the reversal of lockdown trends with customers choosing to return to the high street. The pronounced shift in spend back towards stores supports our continued conviction in the value of our store estate within our customer proposition and as an enabler in our omnichannel ambitions.”
Card Factory says it has fixed its energy costs until September 2024 and has introduced targeted price increases, both offsetting the inflationary effect on its business. It has also taken action to mitigate any potential supply chain disruption in the run up to Christmas by bringing forward both ordering and delivery, and has cleared stock that built up in the pandemic.
“Despite… ongoing challenges, we remain confident that our customers will continue to want to celebrate life’s moments and that value for money is increasingly important to them,” says Willson-Rymer. “Card Factory offers great value for money across a range of products and price points and our experience so far this year confirms how well this resonates with consumers.
“Whilst we remain mindful of the challenging economic backdrop as we head towards the Christmas season, we feel well placed to navigate this and retain our focus on transitioning Card Factory to a market-leading omnichannel retailer of cards and gifts.”
Card Factory is ranked Top250 in RXUK Top500 research. It sells online – through a recently replatformed website – and through 1,026 shops following a net six openings in the half-year.