Card Factory profits slump 12% thanks to increased National Living Wage and weak pound
Card Factory’s annual pre-tax profit fell 12.3 per cent to £72.6m, thanks to an increase to the National Living Wage and higher import costs caused by a weaker pound.
The gift card retailer said costs rose £14.6m in the year to 31 January 2018, meaning profits were down despite a 2.9 per cent rise in like-for-like sales. The firm warned that earnings growth in 2019 will be limited amid continuing headwinds.
The National Living Wage rose to £7.50 per hour from £7.20 per hour for over-25s in April 2017, and rose again to £7.80 this month.
This has hurt the profits of a host of retailers, many of whose staff are among the UK’s lowest paid.
Card Factory’s revenues for the year rose 6 per cent to £422.1m from £398.2m a year ago, despite a “tough consumer environment” as the number of shoppers visiting the high street continued to decline.
But the conditions didn’t stop Card Factory continuing to expand its portfolio, with 50 new stores opening in the period – meaning it now has 915 in total across the UK. The company also opened six trial stores in the Republic of Ireland.
Karen Hubbard, chief executive officer, hailed the company’s like-for-like sales growth and said the average card selling price and total spend per shop had also increased.
“We also saw a record breaking number of customers shopping with Card Factory for both card and complementary non-card products, demonstrating our resilience against a backdrop of high street footfall decline,” she said.
“Our store rollout programme continues, with 50 new UK sites opened in the year, and our Card Factory online business has seen further growth with increased visitors and sales, and represents a clear opportunity for future growth.”
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