Card Factory (CARD)

[Clitheroekid]

I was intrigued by this piece from Edmond Jackson, who I rate - https://www.ii.co.uk/analysis-commentar ... 70120%20(1)&utm_content=&spMailingID=8323113&spUserID=MTQyNzM1ODUxOTY5S0&spJobID=1430860627&spReportId=MTQzMDg2MDYyNwS2

Sorry if they've been discussed before, but the useless search facility gave me 177 entries for "Card Factory" and I didn't have time to look through them.

I'd be interested to hear any views on them, as to me the figures look attractive.

[AsleepInYorkshire]

Am I correct?

No assets and a hefty debt?

Most of the dividend increase from one year alone?

A hefty drop in dividend 18-19

Margin has fallen for three consecutive years (in fact it's only gone up once since it was floated)

They've paid out more in dividends than the debt they currently have - almost as if they were floated by the company that own[ed][s] the debt?

AIYn'U

[dealtn]

It's passed my first filter, which means it will join the queue for further, closer, examination.

I like the cashflow, the fact that the debt is higher mainly as a result of including lease liabilities (not a debt increase itself), and the expansion into joint ventures, home and abroad.

The fact it is at a multi-year price low also appeals, must be the contrarian in me.

[monabri]

I have been tempted. Previously bought CARD too early and averaged down, eventually breaking even on one of the dead cat bounces you can see in the chart early in 2019. I could be tempted back in but I'm not yet convinced the falling knife hasn't got further to fall. I may be missing a bargain, but I'll wait and see. International diversification by UK retailers very often ends badly. Why will CARD be the exception? I don't know.

Good call.

At 99p, the share price is about the same price as one of their cards.

[jackdaww]

i bought these - too many - at around 250 .

have slowly sold them off - too slowly - at around 150 .

why buy them now at 99 - because they have fallen a long way ?

[simoan]

I'll look at CARD again at 60p! Perhaps.

RVF

I've never understood why people set meaningless price targets like this? This is price anchoring front, left and center. If it gets to 60p it'll likely be because of another profit warning, the dividend being scrapped and everyone will suddenly focus on the very viability of the company with it's debt burden and lease commitments - exactly the worst time to invest.

All the best, Si

[WickedLester]

I've never understood why people set meaningless price targets like this? This is price anchoring front, left and center. If it gets to 60p it'll likely be because of another profit warning, the dividend being scrapped and everyone will suddenly focus on the very viability of the company with it's debt burden and lease commitments - exactly the worst time to invest.

These came to my attention today for the first time in a long while after this announcement.

https://www.investegate.co.uk/card-fact ... 00048208I/

Card Factory has made good progress in using its positive cash flows to reduce overall debt. Consequently, it has agreed revised terms on reduced facilities of £150 million (previously £225 million).

As at 31 March 2022, the Group's net debt (excluding lease liabilities) was £79 million. The revised facilities comprise:

It's risen a long way today but looks interesting to me as a recovery play. They finally seem to have stopped paying out all their profit as a dividend financed by debt and are now (at the behest of their Bankers by the look of things) paying down debt. The balance sheet is not great and they expect costs to rise by £30m this year but if they can return to somewhere close to previous levels of turnover I can see the shares doubling from here.

Anyone have a view?

[westmoreland9]

I've never understood why people set meaningless price targets like this? This is price anchoring front, left and center. If it gets to 60p it'll likely be because of another profit warning, the dividend being scrapped and everyone will suddenly focus on the very viability of the company with it's debt burden and lease commitments - exactly the worst time to invest.

These came to my attention today for the first time in a long while after this announcement.

https://www.investegate.co.uk/card-fact ... 00048208I/

Card Factory has made good progress in using its positive cash flows to reduce overall debt. Consequently, it has agreed revised terms on reduced facilities of £150 million (previously £225 million).

As at 31 March 2022, the Group's net debt (excluding lease liabilities) was £79 million. The revised facilities comprise:

It's risen a long way today but looks interesting to me as a recovery play. They finally seem to have stopped paying out all their profit as a dividend financed by debt and are now (at the behest of their Bankers by the look of things) paying down debt. The balance sheet is not great and they expect costs to rise by £30m this year but if they can return to somewhere close to previous levels of turnover I can see the shares doubling from here.

Anyone have a view?

i followed it a bit back in the day.

unless you're talking about a one with a competitive advantage with pricing power, or one with lots of freehold property, coupled with low net debt and lease liabilities, i wouldnt invest in a retailer. most have no pricing power, low margins over an economic cycle, and are locked into high fixed costs if they have no property.

retailers regularly go bust across all stages of the economic cycle. problem is that if profits dry up, there's no underlying value left if there's no property. it's why the shares at card factory have collapsed, for instance.