Reacting to the news that card factory issued a major profit warning that saw its shares drop 22% in early trading; Zoë Mills, lead retail analyst at GlobalData, offers her view: “Despite its value focus, Card Factory operates in a discretionary market, and UK consumers are deprioritising cards amid a challenging retail landscape. The greeting card & gifting specialist places significant importance on a buoyant festive period, but we are seeing a shift away from sending Christmas cards, particularly among younger generations. According to GlobalData survey data, in 2019, 46% of Christmas shoppers bought Christmas cards, yet by 2024 this figure had fallen to 34%. This is a trend that is here to stay, and Card Factory’s pivot to expand its gifting range is certainly its best strategy to react, given the higher margins, but falling demand for its core product is going to make its recovery difficult.
“Card Factory has ensured its integration of Funkypigeon remains on track, and it is focused on executing its ‘Simplify and Scale’ productivity and efficiency programme. Despite the setback, this is the best course of action as inflation persists, and news that the UK economy shrank in October reflects a challenging short-term retail outlook. Continuing to move towards higher-margin categories, including gifting, will be integral, though it will find Moonpig, which subsequently reported a 7.7% increase in adjusted EBITDA this week, a significant rival.”
