Card Factory dives 16% after latest profit warning

Card Factory tumbled to the bottom of the FTSE 250 index on Thursday after the greeting cards retailer issued its second profit warning in four months.

Although the firm saw sales at stores open for a year or more rise 2.7% in the 11 months to December 31, it said that the bulk of growth came from lower-margin products such as decorations, with sales of its cards largely static.

That, coupled with higher wages and import costs, hit margins.

The retailer, which sells many items for under £1 at its 913 UK shops, said 2017 profits are expected to come in at between £93 million and £95 million. The City had been expecting around £97 million.

Kate Calvert, an analyst at Investec, said: “It is disappointing that there has been another downgrade.”

Shares in the firm fell 47.8p, or more than 16%, to 234.6p.

Boss Karen Hubbard said the firm faced “significant cost pressures in the year”, but signalled that cost headwinds should ease, unless there is a “further dramatic shift in sterling”.