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Card Factory's shares plunge

Tough trading will impact profits this year and next, and now management plans to review the dividend
Card Factory's shares plunge

A profit warning at Card Factory (CARD) led the shares to plunge 29 per cent, with efforts to protect against challenging market conditions running out of road.

IC TIP: Sell at 103p

The greeting card maker and retailer is facing problems form the tough retail environment, as well as rising costs due to the impact of a weaker pound on raw material costs and increases to the national living wage. So far, it has managed to mitigate the profit impact through an efficiency drive and improvements to its offer. No more.

Soft Christmas trading led management to cut full-year cash profit guidance to £81m to £83m, from around £87m. It added “the opportunity for efficiencies within the current business model is finite”, with an expected £5m to £10m impact on adjusted cash profits in the 2021 financial year. As a result, it does not expect to pay a special dividend in the year, and is reviewing the size of the ordinary payment.