LONDON (ShareCast) - (ShareCast News) - Retailer Card Factory reported a jump in revenue for the first half as it declared a special dividend, but profit declined on the back of foreign exchange movements, the national living wage and investments.
In the six months to the end of July, revenue rose 6.1% to £179.6m, with like-for-like sales up 3.1% despite a drop in footfall across the high street. However, pre-tax profit fell 14.1% to £23.2m and operating profit was down 14% to £24.6m as the company incurred costs headwinds of around £4.2m from FX and national living wage pressures.

The group lifted its interim dividend by 3.6% to 2.9p per share and declared a special dividend of 15p per share, giving a return to shareholders of £51.2m.

Chief executive Karen Hubbard said: "Our business model remains highly cash generative and we are pleased to be announcing another special dividend of 15p per share. Together with the interim dividend, this means we will have returned £246.5m to shareholders since IPO in May 2014. The Board intends to retain its progressive ordinary dividend policy and to continue to return any surplus funds to shareholders whilst giving consideration to the leverage of the business.

"We are the clear leaders in the greeting card market, with a strong proposition which is resonating well with customers despite challenges in the wider consumer environment. Our unique operating model continues to differentiate us from the competition, allowing us to strengthen our market-leading position."

Hubbard said trading in recent weeks has been similar to the encouraging trends seen in the first half, with continued growth in average spend. She expressed confidence that the group will continue to make further strategic progress, but noted that the full-year profit outturn will be hit by some of the headwinds identified in the first half, such as FX and the national living wage.

At 0950 BST, the shares were down 12.8% to 309.50p.

Russ Mould, investment director at AJ Bell, said: "Despite the obvious headwinds, the share price plunge could be an over-reaction.

"Chief executive Karen Hubbard, and the board, have shown confidence in the Wakefield company's prospects - and above all its cash flow - by sanctioning a 3.6% increase in the interim dividend to 2.9p and offering the prospect of further special dividends.

"Assuming that full-year earnings per share fall by 14% as well, that would give a number of 17.0p - a figure that covers the consensus full-year dividend forecast of 9.37p by a relatively comfortable 1.8 times. That alone would be enough for a 4.2% yield."

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