Card Factory shares plummet 20% after profit downgrade

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Card Factory

Card Factory has endured a sharp decrease in its share price after it revealed profits would come in lower than expected despite a sales rise over the last year.

The retailer has reportedly faced “significant cost pressures” since the fall in the value of the pound, estimating it would see around £8 million in extra costs next year.

In light of this it reduced its expectations for the full year to between £93 and £95 million, down from £98.5 million.

The stock markets reacted badly to the news, and Card Factory’s share prices have plummeted over 20 per cent to 222p per share.

Despite predictions that margins will be hard hit, the retailer posted a 5.9 per cent rise in total sales in the 11 months to December 31, alongside a 2.7 per cent boost in like-for-like sales.

“It is pleasing to report that Card Factory has traded well through the competitive Christmas trading period with customers once again responding positively to our card and non-card ranges,” chief executive Karen Hubbard said.

“As we have reported previously, the group has faced significant cost pressures in the year; these, together with the further change in margin mix given the ongoing out-performance of lower-margin non-card categories, are reflected in our expected out-turn.

“We anticipate that the combined impact of foreign exchange and wage inflation in full year 2019 will result in £7-8 million of additional costs; whilst we have plans to mitigate this impact as far as possible, we recognise that against this backdrop, any earnings growth for the year is likely to be limited.”

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