Welcome greeting on card sales

SALES at Clinton Cards increased 1.8% on a year earlier in the crucial five-week run-up to Christmas. Investors cautiously welcomed the trading statement with the shares rising 1¾p to 97¾p in early trading.

The company said the sales growth came despite a 'more challenging environment on the High Street'.

Barry Hartog, finance director, told This is Money: 'In a way, we can be the victim of what is happening with other retailers. If people go elsewhere than the High Street to buy shoes and clothes then they may also buy cards in other places, such as supermarkets.

'We can tackle that by presenting to customers that if they want that special card then they have to come to Clinton Cards.'

The company had earlier planned to expand its network of stores to 800 by 2005. It now hopes to have 780 open by the end of the year.

Hartog said the focus this year would be on the 500-chain Birthdays stores that Clinton Cards bought last month for £46.4m. Sales at the stores over Christmas were 'in line with Clinton's expectations' but excluded from the figures.

Sales for the 48 weeks to 2 January were 2% higher than the year before. Clinton also said it appointed Stuart McKay as managing director of Birthdays based at its Bury head office. He joined the group from UK Greetings where he was deputy chief executive.

The group's preliminary results announcement for the financial year to 30 January is expected to be made on 20 April.

Shares in the card retailer have performed well in the past three years, rising from 48p to a high of 108½p last month. Fears over Christmas sales had knocked the stock in recent weeks.

Broker Seymour Pierce said Clinton's performance was 'not bad' considering the tough High Street conditions. However, sales were still slightly below its expectations and it cut its full-year pre-tax profit forecast to £30.5m from £31.5m.

'At some point, when the Birthdays acquisition starts to kick in, we can see the profitability of the group significantly increase, however, until this point and with the top line struggling for growth, we move our recommendation to 'hold',' the broker told clients in a note.