Card Factory shares slump after extreme weather prompts profit warning
The company said weak consumer conditions were also affecting the business.
Card Factory shares tumbled after the retailer slashed its profit guidance on the back of extreme weather and weak consumer demand.
The greeting cards and gifts retailer said it now expects full-year underlying earnings to come in between £89 million and £91 million, compared with previous forecasts of £93.5 million.
The company blamed the drop on poor weather conditions and “uncertainty around the UK consumer environment”, and said its current guidance will depend on its performance in the final three months of the year.
Retailers have taken a hit in recent months, not only due to the cold snap brought in by the Beast from the East in the early spring, but the heatwave that has kept shoppers away from the high street.
The news sent Card Factory shares down 7.4% in morning trading.
We believe we are well-positioned to deliver a good performance in our important Christmas trading season Card Factory chief executive Karen Hubbard
Card Factory chief executive Karen Hubbard said: “We continue to experience a weak consumer environment, made all the more challenging by the impact of this year’s extreme weather conditions on high street footfall.
“The performance of our seasonal ranges has been strong, with our best-ever Father’s Day in terms of volume and value, although we recognise there has to be more focus on our Everyday ranges, which have lagged the seasonal performance.
Card Factory issued the warning in a trading update which also detailed a 0.2% drop in like-for-like sales over the six months to July 31, despite a “record” Father’s Day season, as weather and consumer conditions took their toll.
Total group sales growth also slowed to 3.2% from 6.1% a year earlier.
Getting Personal – its personalised gifts division – suffered an 8.5% fall in sales, which the company blamed on a “highly price-competitive market”.
“Our key Q4 trading period will, of course, be critical in determining the final result for the year, but we believe we are well-positioned to deliver a good performance in our important Christmas trading season,” Ms Hubbard said.
The company said it is still charging on with expansion plans after opening 25 new UK stores on a net basis in the first half of the year.
It is on track to hit its target of about 50 new openings for the full year.