Card Factory warns on profits, cites soft high street footfall

(Sharecast News) - Card Factory warned on profits on Friday as it pointed to weak consumer confidence and soft high street footfall. The company, which sells greetings cards and gifts, said the pressures facing the UK consumer have been well publicised over recent months.

"It is an inescapable fact that these pressures have impacted consumer confidence and shopping behaviour, contributing to soft high street footfall," it said.

"Those conditions have persisted as we moved into our most important trading period, leading to a UK store sales performance which is lower than our previous expectations."

Assuming current trading trends persist over the remaining seven weeks of its financial year, Card Factory now expects to deliver full-year adjusted pre-tax profit of between £55m and £60m.

Previously, it had guided to mid-to-high single-digit percentage growth in adjusted pre-tax profit for FY26, from £66m.

The group said progress on its long-term strategy has continued through the period, including effective execution of its 'Simplify and Scale' productivity and efficiency programme, as it continues to mitigate ongoing high inflation impacting UK retail businesses.

"Performance of our other businesses, including those in the Republic of Ireland and North America remain in line with our expectations," it said, adding that the integration of Funky Pigeon remains on track.

"The board remains confident in the group's long-term strategy. The share buyback programme will continue and the board anticipates declaring a progressive full-year dividend, in line with its capital allocation policy."

At 0850 GMT, the shares were down 23% at 74.26p.

Dan Coatsworth, head of markets at AJ Bell, said: "There is a Nightmare before Christmas for Card Factory as it delivers a festive profit warning. It blames a weak UK high street, but it's hard to look past the fact that a first-class stamp now costs more than one of its Christmas cards.

"Just as the advent of email and text communication kiboshed sending letters, the writing is also on the wall for sending Christmas cards.

"It's not just the cost of sending an item by post that's causing a headache. Weaker high street footfall is also a problem as Card Factory is heavily dependent on passing trade.

"Whereas some retailers like clothing companies have the internet channel to drive sales, Card Factory is very much a physical store-led business. At the half-year results it bemoaned an 11.3% drop in online like-for-like sales, citing a strategic shift to focus on higher margin sales such as gifts and party supplies. Greetings cards are its bread and butter, and most people will buy them in person."