Card Factory Issues Shock Profit Warning During Peak Christmas Period
Card Factory has issued a profit warning, expecting its annual adjusted pre-tax profits to be between £55 million and £60 million. This represents a decline from last year's £66 million and falls short of previous growth expectations.
Shares in the company dropped approximately 23% in early trading following the announcement.
The company cited reduced consumer confidence and shopping activity in the UK due to ongoing consumer pressures, leading to weaker store sales performance during the peak Christmas trading period. UK store sales were lower than previously expected, although operations in North America and Ireland remained in line with expectations.
Card Factory's online sales continue to be supported by Funky Pigeon, which was acquired from WH Smith in July for £24 million. The integration of Funky Pigeon is on track as planned.
Despite the challenges, the company maintains its long-term strategy and is implementing a productivity and efficiency programme aimed at mitigating the impact of high inflation. The board remains confident in the company's direction.
The broader macroeconomic context includes a long-term decline in physical card spending and decreases in Royal Mail volumes. Additionally, rising stamp prices and regulatory changes by Ofcom affecting postal services have influenced consumer behaviour.
