The Lemon Fool

What do Lemons think of the survival prospects of Card Factory? I read the following on Citywire today, saying that it was seriously undervalued,
https://citywire.co.uk/funds-insider/ne ... ernoon#i=2 (that seems a very long link; hope It works)

That was before it went down another 5%. I seem to remember topping up at another point when their s.p. had dropped a lot and now I'm down over 80% so I don't feel inclined to do what I did with Carillion and Interserve. I was quite surprised to hear someone from the latter talking about how they put together a new hospital for virus sufferers a couple of days ago. I thought they had gone bust.

No comments on here following CARD's results so presumably I am the only one still holding. Up nearly 15% today but will they ever get back to their former heights?

I looked at Card about 12 months ago.

They seem loaded with debt. And that would worry me as I can't understand how they could rack up such huge debts when all they need is a shop and some cheap stock by way of cards. Have they been in private ownership at some point in the past and "acquired" their debts during that period?

AiYn'U

Debt increasing over the last 5 years but a worry because of recent events ( Brexit, Covid-19).

From ( free version) of Simply Wall Street



The Investors Chronicle did a review yesterday.

https://www.investorschronicle.co.uk/ti ... the-virus/

Seems that CARD bought a load of inventory to mitigate Brexit supply issues. It's sitting on £15m additional inventory with shops closed. The worries about how they will maintain social distancing in their shops and concerns about a 2nd wave of Covid-19 ( shops closed again) play heavily as they might then breach revised financial covenants ( this is where the debt levels come into play....negatively!....they would still need to pay their landlord shop rentals).

My view is that they've been "unlucky" (Brexit planning stock levels, general poor footfall on the high street followed by Covid 19). The business is on a knife edge...more bad luck and it could be Goodnight Vienna. I can't see a dividend returning for a while but if it did I would suggest that that would be a bad move on the part of the mgt team.

One thing that has puzzled me about CARD...I live in a medium size town...the high street is suffering but CARD are running 2 shops within a minutes walk of each other...that seems daft to me!

In days of old, the operating margin was very nice. The divi was also covered out of the free cash flow.



Can they get a break and recover?

i sold out at about 150 at a substantial loss.

one of my better exits.

no plans to buy in again.

Up over 13% today but that doesn't make much impression on the loss.

AsleepInYorkshire wrote:I looked at Card about 12 months ago.

They seem loaded with debt. And that would worry me as I can't understand how they could rack up such huge debts when all they need is a shop and some cheap stock by way of cards. Have they been in private ownership at some point in the past and "acquired" their debts during that period?

AiYn'U

they effectively borrowed to pay a series of special dividends.

westmoreland9 wrote:

AsleepInYorkshire wrote:I looked at Card about 12 months ago.

They seem loaded with debt. And that would worry me as I can't understand how they could rack up such huge debts when all they need is a shop and some cheap stock by way of cards. Have they been in private ownership at some point in the past and "acquired" their debts during that period?

AiYn'U

they effectively borrowed to pay a series of special dividends.

Eew

AiYn'U