Card Factory shares dive on ‘truly shocking’ profit warning

Investors took budget retailer Card Factory off the Christmas card list today after a “truly shocking” profit warning.

Shares plunged 22% or 31p to 109.4p as the company warned that profits would now be between £81 million and £83 million, compared with forecasts of £87 million. A warning over falling High Street footfall, the weakness of the pound and rising costs including wages also spooked investors.

Same-store sales over 11 months to December 31 fell 0.6% while group revenues rose 3.6%.

The dividend will remain, but there’ll be no special dividend next year, it said.

Chief executive Karen Hubbard said: "The Christmas trading period continued to be challenging given the general election and weak consumer confidence, the impact of which can be seen in the footfall decline experienced in the period.”

The company will now review its strategy. It has already been attempting to diversify by supplying other rertailers including Aldi, Matalan and Australia’s Reject Shop.

Peel Hunt analyst Jonathan Pritchard advised investors to “throw your cards in” in a Sell note. “Card Factory’s Christmas update is truly shocking… [sales have] collapsed in recent weeks, and management seems to have lost all confidence: forecasts are being decimated, the special will become a distant memory and the ordinary will also probably be cut.”