Card Factory Navigates Inflation, Digital Expansion Drives Optimism

Card Factory PLC (LON: CARD) has released its interim results for the six months ended July 31, 2025, showcasing resilience amid a challenging retail landscape.

While revenue experienced a healthy increase, profitability metrics faced headwinds due to strategic investments and inflationary pressures.

After initially rising following Tuesday's open, Card Factory shares are now down over 4%.

Revenue climbed to £247.6 million, a 5.9% increase compared to £233.8 million in the first half of the previous year.

However, adjusted EBITDA dipped 2.4% to £44.2 million, and adjusted PBT declined 9.0% to £13.2 million. The company attributes the profit decline to planned investments aimed at improving efficiency, including an upgrade to the point-of-sale system.

Despite the profit decrease, Card Factory increased its interim dividend by 4.9% to 1.3 pence per share, signaling confidence in its long-term financial health and commitment to returning value to shareholders. The board has also approved a share repurchase plan to offset equity dilution from employee share schemes.

Net debt (excluding leases) increased to £78.9 million, resulting in an adjusted leverage ratio of 1.0x. Cash from operations showed significant improvement, jumping 74.3% to £30.5 million.

CEO Darcy Willson-Rymer commented, “Our resilient first half performance against a challenging retail backdrop demonstrates the effective execution of our growth strategy and our ability to navigate inflationary pressures,” highlighting the company's focus on strategic execution.

Card Factory's outlook remains unchanged, with expectations of mid-to-high single-digit percentage growth in adjusted PBT for the full year.

This forecast hinges on a strong second-half performance, driven by new Christmas ranges, an expanded Halloween range, and the benefits of the company's “Simplify and Scale” program.

The acquisition of Funky Pigeon, completed in August 2025 for £24.1 million, is expected to enhance earnings in the financial year ending January 31, 2027. The group anticipates annual synergy benefits of over £5 million by the end of FY27 through optimizing manufacturing, fulfillment, technology platforms, and ranging.