Card Factory H1 2025 Results – steady top line, lower margins, and a digital step-up with Funky Pigeon
Card Factory delivered a balanced set of half-year numbers. Revenue grew while profits softened, and management kept full year guidance unchanged. The big strategic move is now post period-end – the purchase of Funky Pigeon – which meaningfully upgrades the digital playbook ahead of the crucial Christmas season.
Headline numbers retail investors should know
| Metric | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | £247.6m | £233.8m | +5.9% |
| Adjusted EBITDA | £44.2m | £45.3m | -2.4% |
| Adjusted PBT | £13.2m | £14.5m | -9.0% |
| Statutory PBT | £7.5m | £14.0m | -46.4% |
| Adjusted EPS | 2.8p | 3.1p | -0.3p |
| Interim dividend | 1.3p | 1.2p | +4.9% |
| Net debt (exc. leases) | £78.9m | £74.9m | +5.3% |
| Adjusted leverage | 1.0x | 0.9x | +0.1x |
Jargon buster: LFL means like-for-like – sales growth from stores and sites that were open in both periods. Adjusted PBT/EBITDA exclude one-off items to show underlying performance. Leverage is net debt divided by a form of EBITDA.
Stores held their nerve, partnerships accelerated, online refocus continues
- Store revenue rose +2.9% with LFL up +1.5%, despite softer summer footfall. Average basket value increased by +4.1% and the group added 13 net new stores in H1, part of +30 net new year-on-year. Estate reached 1,103 stores at period end and 1,111 “as of today”.
- Partnerships revenue jumped to £16.5m (HY25: £6.6m). Acquisitions Garven and Garlanna contributed £9.8m, and organic partnerships delivered +15.7% growth.
- cardfactory.co.uk LFL fell (11.3%) as the offer is deliberately shifting to higher margin sales. Getting Personal closed on 31 January 2025, benefiting the bottom line.
Seasonal events landed well. Valentine’s and Mother’s Day were strong, with a record trading day the Saturday before Mother’s Day. Range innovation is doing some heavy lifting too – premium card ranges are lifting average selling prices while keeping value credentials, and stationery delivered +20% LFL.
Margins and profits – what moved the dial
Gross margin fell to 29.6% (HY25: 32.6%). Two things to note:
- Mix shift – as Card Factory sells more non-card products and expands partnerships, product margin rates ease, though cash margin and total earnings can still improve.
- FX accounting – a £3.4m unrealised loss on USD hedges hit statutory numbers. These contracts mature in future years and are excluded from adjusted measures.
Adjusted EBITDA was £44.2m (-2.4%), and Adjusted PBT came in at £13.2m (-9.0%). Management brought forward efficiency-focused investments, notably a till system upgrade, which weighed on H1 but should aid H2 productivity. Statutory PBT was £7.5m, reflecting £5.7m of non-underlying items including acquisition costs and FX derivative revaluation.
Cash flow and balance sheet – better working capital, manageable leverage
- Cash from operations rose to £30.5m (+74.3%), helped by improved working capital. Free cash flow outflow improved to -£7.5m (HY25: -£24.9m) – seasonally normal given stock build ahead of Christmas.
- Net debt excluding leases was £78.9m. Adjusted leverage ticked up to 1.0x but remains well below the 1.5x policy ceiling.
- Interim dividend lifted to 1.3p, and the Board plans to purchase shares to satisfy employee schemes to avoid dilution of roughly 3-4 million shares per year.
Funky Pigeon acquisition – why it matters
Completed in August 2025 for £24.1m, Funky Pigeon makes Card Factory the second largest online card and attached gifting retailer in the UK market. Management expects the deal to be earnings enhancing in FY27, with more than £5m of annual synergies by the end of FY27 from manufacturing, fulfilment, tech and range optimisation.
This is a material accelerator for the digital strategy, especially in direct-to-recipient cards and attached gifting. It also opens up data advantages – the plan is to enhance data capture from 24 million unique store customers and leverage that across Funky Pigeon and the wider omnichannel offer.
Outlook and guidance – focus on H2 delivery
Full year expectations are unchanged. Profit remains H2 weighted due to seasonality, timing of investments and inflation mitigation actions. The Board continues to expect mid-to-high single-digit percentage growth in Adjusted PBT in FY26, with strong plans across Halloween and Christmas.
Cost inflation is sizeable – more than £20 million in FY26, including National Living Wage and employer National Insurance increases – but the multi-year ‘Simplify and Scale’ programme is designed to largely offset these pressures. The new till PoS rollout should support store efficiency gains into the second half.
My take – resilient engine, improving toolkit, but execution still key
Positives:
- Top line resilience – +5.9% revenue with LFL store growth in a softer footfall environment.
- Partnerships momentum – both acquired and organic growth are contributing nicely.
- Cash discipline – operating cash flow improved markedly, helping hold leverage in check.
- Strategic clarity – Funky Pigeon meaningfully upgrades the digital route to growth and synergy potential looks tangible.
Watch-outs:
- Margin compression – gross margin down 3.0ppts, reflecting mix and FX. That narrative likely persists as mix broadens.
- Statutory vs adjusted gap – non-cash FX derivative losses make statutory optics tough; investors should understand the distinction, but the gap can still spook the market.
- H2 execution risk – guidance leans on a strong festive season and delivery of efficiency gains.
- Cost headwinds – wage and NIC increases remain a drag, even with mitigations.
What I am watching next
- Halloween and Christmas performance against plan, including premium card and roll-wrap value propositions.
- Early integration milestones and synergy delivery cadence at Funky Pigeon.
- Partnerships growth outside the UK – progress in the US trial, Australia rollout via third party logistics, and New Zealand opportunity.
- Store estate productivity post PoS upgrade and further labour efficiency gains.
Key operational highlights worth noting
- Store LFL +1.5% and total store sales +2.9% with 13 net new stores in H1.
- Partnerships revenue £16.5m versus £6.6m – with Garven and Garlanna contributing £9.8m.
- cardfactory.co.uk LFL -11.3% as the mix shifts to higher margin orders.
- Basket values up +4.1%; premium card range broadened to attract more affluent shoppers while keeping value.
- Stationery +20% LFL, baby gifts +28% and party tableware +23% growth highlighted in H1.
Housekeeping – dividend and webcast
- Interim dividend: 1.3p per share. Record date 7 November 2025. Payment 12 December 2025.
- Analyst and investor webcast: 10am today – register at https://storm-virtual-uk.zoom.us/webinar/register/WN_rDIgvN4MQQeJhSxSczKvuw
- Materials will be available at the investor site: www.cardfactoryinvestors.com
Bottom line
This is a sensible H1 in a tricky retail backdrop. Stores ticked over, partnerships accelerated, and cash generation improved. Margins are the pressure point, but Card Factory is investing smartly to unlock efficiency and building a more scalable digital platform via Funky Pigeon. The stage is set for a pivotal H2 – now it is all about flawless execution through Halloween and Christmas.
