Card Factory shares dive as profits fall

Shares in Card Factory have dived over 18% after higher costs cut into the retailer's half-year profits.

The FTSE 250 firm reported a 14% drop in profits to £23.2m, blaming currency moves, higher wage costs and investment in the business for the fall.

The weaker pound has affected the retailer, as about half the goods it buys are priced in dollars.

Card Factory added that its full-year profit would reflect the "headwinds" felt in the first half of the year.

Sarah Johns, retail analyst at GlobalData, said the greetings card retailer needed to focus on its online business.

"The retailer is right to continue its aggressive expansion; however, with high street footfall declining and online the fastest growing channel in the UK greetings card market over the next five years, Card Factory must invest in its multichannel offer," she said.

"The retailer continued to grow sales via online during the period, but has some way to go in becoming an established player in the online personalisation card category, with Moonpig.com and WH Smith-owned funkypigeon.com key threats."

On the wider market, the FTSE 100 closed 15.55 points lower at 7,285.74. WPP was one of the biggest fallers on the index after Morgan Stanley cut its rating on the advertising giant to "equal-weight" from "overweight".

The pound fell 0.3% against the dollar to $1.34220 but rose 0.3% against the euro to 1.14010 euros.