Following today’s release of Card Factory figures for FY2020/21; Zoe Mills, senior retail analyst at GlobalData, a leading data and analytics company, offers her view: “With a proposition reliant on its extensive store network, it comes as no surprise that Card Factory has seen its worst year on record in FY2020/21, as the COVID-19 pandemic meant that its store portfolio was temporarily shut for approximately five months of the year. Total sales fell by £166.4m to £285.1m, with this dire performance driven solely by offline sales. This has had a significant impact on profitability at the greeting cards specialist with Card Factory reporting a loss before tax of £16.4m, compared to a profit before tax of £65.2m in FY2019/20. While it has made steps to bolster its profitability and financial position, preserving cash with a £35m reduction in net debt in the period, Card Factory will be hoping for no further store closures if it is to recoup its losses.
“Despite a poor offline performance, Card Factory has seen progress in its online proposition, with sales up 42.0% for the 52 weeks ending 31 January 2021 – Cardfactory.co.uk was up 135.3% and Gettingpersonal.co.uk’s sales increased by 12.2%. It relaunched Cardfactory.co.uk in July 2020, complementing the updated Gettingpersonal.co.uk website that launched in Q3 2019/20 and this investment in online will be essential in supporting Card Factory’s business in the future. However, with online sales of just £27.6m, meaning online penetration is only 9.7%, Card Factory has a long way to go before it can compete with online greeting card giants Moonpig and Funkypigeon. And while Card Factory does not typically invest in advertising, these online pureplays have become front of mind for online greeting card purchases arguably because of the extensive TV advertising they do. Card Factory must do more to raise awareness of its proposition.
“Retail partnerships with the likes of Aldi have also proven successful in this financial year, with its presence in these locations offering Card Factory a physical touchpoint during the numerous lockdowns in the UK. Sales were up 83.3% reaching £5.6m and while still a small aspect of its overall proposition at 2.0% of total sales, it would do well to extend this over the next year.
“Card Factory will not have started FY 2021/22 on a high with its stores shuttered for the first two and a half months. This next financial year hinges on stores being able to remain open for a prolonged period and with an extensive vaccination programme on track to have the adult population receive their first dose by the end of July 2021, this does offer hope for Card Factory and retail in general. Nevertheless, with stores now open once again, it must continue to push ahead with its online proposition to strengthen its overall position in the market and safeguard against potential offline declines, building destination appeal online.”