Card Factory warns of lower profits this year as inflation bites
Card Factory has warned shareholders of lower profits this year due to rising inflation in the UK, which sent its share price into the red.
The “significant inflationary headwinds” facing the card maker has already seen it hike prices while it focuses on making the business more efficient.
However, the London-listed company cautioned that, despite its efforts, the pressures of inflation will not be completely offset, “resulting in lower profits than previously anticipated by the board”.
Shares sank 16.8 per cent to 52.8p per share by mid-afternoon.
Profit before tax is expected to fall within the range of £7m and £10m, while revenue for this year is forecast to exceed £360m.
“Our vertically integrated model has put the group in a strong position to partially mitigate the supply chain challenges and inflationary pressures that have been seen across the wider market to date,” CEO Darcy Willson-Rymer said in a statement.
“Whilst we expect to be able to offset inflationary pressures to an extent through price increases across our ranges, we do anticipate some margin pressure during the next financial year, as the forecasted inflationary headwinds continue.”
It follows an upbeat trading period for the company, with sales for the year to December 31 surpassing board expectations at £337.3m.
The card maker also enjoyed a sturdy trading period over Christmas, despite reduced levels of footfall on the high streets and supply chain issues.
“We continue to see improved trading performance across all channels, with transaction volumes in our stores outperforming high street footfall recovery, demonstrating the loyalty of our customers and strength of the brand,” Willson-Rymer added.
“The customer response to our Christmas ranges was particularly strong, across both card and complementary product ranges.”