Card Factory shares fell sharply early morning – down 18.2% to 231.12 following the greeting card retailer's latest trading update.
The company reported a solid level of sales growth in the Christmas period driven by a combination of like-for-like sales growth and new store roll out.
In 2017, 48 new UK stores were opened, bringing the total UK estate to 913 stores. In addition, the Group opened six new trial stores in the Republic of Ireland over the period.
Sales performance over the Christmas period at gettingpersonal.co.uk, the company’s online personalised gifting business, was disappointing which has resulted in a broadly flat sales performance year to date.
Across the Group, like-for-like sales growth has been driven primarily by lower margin non-card categories, such as gifts and dressings, with card sales stable year on year.
Given this, and the previously announced margin pressures being experienced by the group, the board currently expects underlying EBITDA for the current year to be in the range £93.0-95.0m.
Commenting on the latest figures, Karen Hubbard, Card Factory's Chief Executive Officer, said: ""As we have reported previously, the group has faced significant cost pressures in the year; these, together with the further change in margin mix given the ongoing out-performance of lower-margin non-card categories, are reflected in our expected outturn.
"We anticipate that the combined impact of foreign exchange and wage inflation in FY19 will result in £7-8m of additional costs; whilst we have plans to mitigate this impact as far as possible, we recognise that against this backdrop, any EBITDA growth for the year is likely to be limited. Looking further ahead, cost headwinds should ease unless there is a further dramatic shift in sterling.
She added: "We believe that our market leading proposition, underpinned by our unique vertically integrated model, provides our business with significant competitive advantage."