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Card Factory downgraded by UBS as it awaits new strategy

Published: 05:04 21 Jan 2020 EST

Card Factory - Card Factory downgraded to ‘neutral’ by UBS until it reveals new strategy
How to attract more shoppers is a problem all along the high street

Card Factory PLC (LON:CARD) was downgraded to ‘neutral’ by UBS while analysts wait for a recovery plan to be revealed in April.

The broker’s price target was slashed to 100p from 220p to reflect recent margin and sales declines.

READ: Card Factory crumples as it cuts profit guidance, reviews strategy

The FTSE 250-listed greetings cards chain has hit by lower high street footfall and rising cost inflation, prompting a strategy review.

Analysts expect management to discuss the performance of the online business, which has seen sales declining 10% since 2017, how to manage the footfall drop and how to mitigate higher costs.

The Swiss investment bank forecasts negative like-for-like sales over the next two years of 1% and 0.5% respectively.

“The market already appears to be pricing in severe declines in underlying (EBIT) margins and sales growth,” analysts said in a note.

“With a strategic review underway and thus in the absence of evidence to suggest external headwinds (falling high street footfall, rising costs) can be mitigated, we believe these assumptions are realistic.”

Shared dropped 4% to 92.61p on Tuesday morning.

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