April 10, 2018 / 6:46 AM / 10 months ago

Card Factory bucks UK's gloomy retail trend, plans special dividend

(Reuters) - Greeting card retailer Card Factory (CARDC.L) is attracting more customers to its high-street stores in Britain, its CEO said, after the company reported a 6 percent increase in annual sales and proposed a special dividend, boosting its shares.

Card Factory’s strong performance provides a rare bright spot amid the gloom about British high street retailers, which have been hit by online competition and economic uncertainty surrounding Brexit.

“The high street shops have really worked for us,” Card Factory Chief Executive Karen Hubbard told Reuters on Tuesday after the company reported a 2.9 percent increase in comparable sales for the year ended Jan. 2018.

In the year to Jan. 31, the company, which sells most of its products for less than a pound, opened 50 sites across the country, with 29 of them on the high street. It now trades from 915 outlets in the UK.

Hubbard said she did not expect a big increase in the number of new high street shops Card Factory opens this year.

“Other businesses in the past who have accelerated their roll-out plan have got themselves into a bit of trouble after opening too many in a year,” Hubbard said adding she expects to open a further 50 new stores in the current financial year.

On at its online operations, sales grew 67 percent at cardfactory.co.uk in the year to Jan. 31.

Card Factory listed in 2014 and its rivals include Clintons and Scribbler card shops.

Its shares rose as much as 7.7 percent, helped by the company’s 2.2 percent increase in final dividend and its plan for a special dividend of between 5-10p at its interim results in September.

Analysts at Peel Hunt said in a note that the in-line results from Card Factory were perfectly laudable given that conditions in the wider market were very tough. The brokerage has a “hold” rating on the stock.

Revenue increased 6 percent increased to 422.1 million pounds ($596.2 million).

Underlying full-year core profit fell 4.6 percent to 94 million pounds on costs linked to Britain’s National Living Wage and unfavourable currency effects, but the result was within the company’s guidance range of 93 million to 95 million pounds.

Reporting by Rahul B in Bengaluru; Editing by Amrutha Gayathri and Jane Merriman

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