Card Factory same-store sales rise, profit slumps on higher costs

(Reuters) - Card Factory's <CARDC.L> first-half like-for-like sales grew 1.5%, but profit fell because of higher costs to build up inventory for its greeting cards and gifts ahead of Brexit and holiday purchases, the company said on Tuesday.

Pretax profit fell 14.4% to 24.3 million pounds for the six months ended July 31 as Card Factory also invests into growing its business and newer product lines, while total operating expenses rose 6.3% to 42.4 million pounds.

Shares of the company, however, surged 8% in early deals after it said it expects to report adjusted underlying core profit for the year in line with market expectations, as it reins in costs in the second-half, helped by changes in its supply chain and operations.

The company on Tuesday also said it had signed new retail partnerships in the UK and abroad as it looks to grow its market share.

Retailers on the high street have been hit by lower footfall, online competition and costs of maintaining brick-and-mortar stores. Britons are also cutting back on spending as the country's impending exit from the European Union weighs on sentiment and the economy.

Card Factory has been trying to offset the challenges by expanding its online business, focusing on personalisation, and newer varieties for seasonal festivities like Valentine's day, Mother's day and Christmas.

It said sales at its website Cardfactory.co.uk rose by 25%.

"The successful seasonal trading, combined with more sophisticated use of data and improvements to our customer experience, gives us confidence for the key Christmas trading period ahead," Chief Executive Officer Karen Hubbard said.

(Reporting by Tanishaa Nadkar and Pushkala Aripaka in Bengaluru; editing by Uttaresh.V)