Card Factory’s shares slump 20%
Card Factory’s shares slumped more than 20% in early trading this morning after investors were spooked by warnings about cost pressures.
Its shares, which closed last night at 282p, dipped below 222p in the first hour in response to the retailer’s Christmas trading update, wiping off around £200m from its market value. Shares closed at 225p; knocking £193m from its value by market closure.
The Wakefield-based group, which is listed on the FTSE 250, had emphasised that it had “traded well” during Christmas and like-for-like sales had improved.
However CEO Karen Hubbard warned the group had faced “significant cost pressures” during the year and that its sales had shifted towards categories that produce lower margins than greetings cards.
In addition the double whammy of foreign exchange and wage inflation is expected to add costs of up to £8m – which Hubbard said will mean any increase in profitability is “likely to be limited” in its next financial year.
Meanwhile, it was announced that Hubbard had spent £50,000 on shares in the company this morning after the price dropped.
Hubbard purchased, in aggregate, 20,387 ordinary shares at an average price of 239.1p per share.
AJ Bell investment director Russ Mould said: “Card Factory’s shares tumbled after it warned that the prospects for earnings growth were likely to be limited.
“The sales performance over the Christmas period at gettingpersonal.co.uk, its online personalised gifting business, was disappointing.”
This is despite the news that the firm reported a like-for-like store sales growth of 2.7% in the 11 months to the end of December. Forty-eight new UK stores were opened in the period, bringing the total UK estate to 913 stores.
