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Card Factory slump hits Woodford and Barnett

Shares in greetings card retailer slump on lower profits and news special dividends will be reviewed.

 
Card Factory slump hits Woodford and Barnett
 

Shares in Card Factory (CARDC) have tumbled after the retailer reported a 14% drop in first-half profits and said it would review the payment of special dividends.

The shares slumped 18.3% to 290p, falling to the bottom of the FTSE 250, in a blow to fund manager backers Neil Woodford and Mark Barnett.

Invesco Perpetual is the group's largest shareholder, with manager Mark Barnett holding the stock in his Invesco Perpetual Income  and High Income funds.

The stock meanwhile makes up 2% of Woodford's Income Focus fund, with the manager also holding a tiny stake in his Woodford Equity Income fund.

Card Factory reported profits of £23.2 million for the six months to the end of July, down from £27 million over the same period last year, hurt by the weak pound and rising wage costs.

It paid an interim dividend of 2.9p and a 15p special payout, but said it would review the amount and timing of future 'specials', 'mindful of the increase in leverage... as well as the margin and cost headwinds which may limit profit growth in the short to medium term.'

'Management's rhetoric on dividend policy has spooked the shares,' said Jonathan Pritchard, analyst at Peel Hunt.

'We have always considered that the 15p special (confirmed for the third year running) was set in stone and actually should not be considered a special at all. 

'This approach was too aggressive, and management is stating that whilst specials will undoubtedly be a feature in the future, they should not be looked on as an annual event, nor should 15p be seen as the standard number.'

But he retained his 'buy' rating on the shares, saying the share price fall presented 'a highly attractive entry level'.

'Nothing we have learned today changes our view on the long-term future of the greetings card industry, or of Card Factory in particular,' he said.

Card Factory was the biggest mover in an otherwise lethargic day for markets. The FTSE 100 fell 16 points to 7,286 while the FTSE 250 dropped 0.3%.

18 comments so far. Why not have your say?

Alastair Kendall

Sep 26, 2017 at 20:25

If Woodford owns it .....sell it.

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Tony Peterson

Sep 26, 2017 at 21:21

I have found it very profitable to buy what he is selling.

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Jeff Liddiard

Sep 26, 2017 at 21:43

Tony, he owns it, he might not be selling it! I have been looking at it today though, and wondering if indeed the £2.90 is a good entry point. However, it has shot up a lot in the last 3 months and is back to where it was then, so maybe not such a bargain at £2.90.

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Tony Peterson

Sep 26, 2017 at 21:49

Jeff

I have no intention of buying into Card Factory.

Woodford made such a big hoo ha a few years back about getting out of Vodafone (at around 150 if I remember correctly) and that was just before Verizon was spun off. I piled in. Profitably.

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Jeff Liddiard

Sep 26, 2017 at 21:53

Tony, we are agreed on that. Please continue to keep us all informed of your buying and selling in the forums.

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Les Ware

Sep 26, 2017 at 22:35

Not again are these two on holiday . Do they no anything about the company's they invest in. If they do , the should no better . I am getting out of these to past it traders . If they are doing bad in the best bull market ever . Be very carful. Sell sell sell.

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albion

Sep 26, 2017 at 22:54

Woodford's name on Citywire again, what a surprise!!

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Jim Thompson

Sep 27, 2017 at 08:54

Jeff, I have not looked at any figures for The Card Factory, but based on psychology I can't see why one would invest.

I bought a card from there this week, the card was cheap, and it was busy in the shop. I thought that their margins must be tight, relying on volumes. And are card buyers a dwindling market? E-cards and youth apathy replacing them (why buy a card when you can send a 'like' on Facebook), and supermarkets picking up the rest of the sales?

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richard tomkin

Sep 27, 2017 at 09:21

It shows that even the most hyped fund manager cannot be lucky forever

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Jeff Liddiard

Sep 27, 2017 at 12:01

Jim, thanks for the input. You've look at it from a different perspective than me and I think you are right from an investment point of view. Always good to bounce ideas around and learn from them. Thanks again.

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HUFC

Sep 27, 2017 at 14:14

I wonder if Neil Woodford feels like a rock star or premiership footballer - feted & built up by the press & then knocked at every available opportunity? Some of these articles are written in such a way that one would think he is actually managing the businesses (Card Factory, Paragon etc) himself & he alone is responsible for the downturn, temporary or otherwise, in their fortunes.

No investor gets every decision right, & as he is a long-term investor, who at this stage is to say he's got these investments wrong over the long term?

If Card Factory shares bounce back a bit tomorrow, will the "hit" in the headline be retracted to something softer?

If the shares "have shot up in the last 3 months" both managers may still be in profit today. A reference to their average purchase price would have given the article more credence.

I don't own any of Woodford's investment units, so I'm not commenting with any interest to declare

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Les Ware

Sep 27, 2017 at 16:04

This not the point he should have seen this coming . But are to big & to busy buying tech company's . All Woodford 's trust are going down from tec to financial's. To retail. Everything is for the future. But the Big BEAR,. Is waiting . Be very carful with his funds. Unless you are forty or under. I have seen all this before buy at the top. Mugs game.

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HUFC

Sep 27, 2017 at 16:16

So " Unless you are forty or under" you can take a long term view, but a fund manager should only consider the short term?

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Les Ware

Sep 27, 2017 at 18:02

Only whith Woodford fund should you be under forty.

There are funds out there now ,that are doing it. Buy them .Not Woodford. If you want long term go Asia or tec or bio but. Be carful . There people out there who no more about tec @bio than Woodford . His record in this bull market is just not good. And as for Barnett. What can you say ,he has missed the boat. Lindsell Train .are in a different League

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bouleversee

Oct 02, 2017 at 18:31

Neil Collins in his FT column on Sat. was very supportive of Card Factory.

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bouleversee

Oct 02, 2017 at 18:34

Tony Peterson -

What are your views on VOD now?

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Tony Peterson

Oct 02, 2017 at 20:00

bouleversee

I don't really have a "view" on VOD. It's a huge company with global outreach and is unpopular with Private Eye for its tax deals (likewise the Indian government). The switch to euro dividends probably indicates a move to Ireland on Brexit.

Our 6 figure holding has already paid for itself totally in sliced profits and dividends. I last sliced profit in June at 228 and replaced these a few days back at 208.

But I am very grateful to Woody for making such a big fuss about getting out of VOD. It was then a minor holding in our certificated portfolio, but when Woodford piled out we piled in. Bless him. Verizon was pure proffit.

So now if VOD falls below 205 I will top up with a few retained recent dividends. And if it rises above 230 I will slice a bit more profit.

But.....views_ - I don't know the future. Whatever. I like falling markets best.

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HUFC

Oct 03, 2017 at 09:12

Back on to thread - Card Factory back up to 315p but I don't see "tumbled" being revised by the author to something less dramatic

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