UK's Card Factory warns on profit as weak sales dim holiday outlook

Dec 12 (Reuters) - ‌British retailer Card Factory warned of lower annual profit on Friday due ‍to ‌weak UK store sales that have persisted into the critical holiday shopping season, ⁠a grim update that sent its ‌shares tumbling as much as 27%.

The seller of soft toys, gifts, Christmas cards and decorations, which operates more than a thousand stores across Britain and Ireland, said weak consumer sentiment ⁠in recent months had hit shopping behaviour and hurt high street footfall.

"Those conditions have persisted as we ​moved into our most important trading period, leading to ‌a UK store sales performance, which ⁠is lower than our previous expectations," the company said.

Retailers had a particularly bad month in October, according to official data on Friday that showed the ​UK economy shrank unexpectedly in the three months to October.

Panmure Liberum analyst Wayne Brown said the company's update came as a "shock warning that surprises in scale", raising questions over whether its shift toward celebration products has made it more ​exposed ‍to economic cycles.

SLOW FESTIVE START 

Card ​Factory's shares dropped to a more than three-year low.

A Barclays survey on Tuesday showed that Britons were conservative with their spending in November and Black Friday ahead of the UK budget, though a PwC survey on Friday expected holiday spending to pick up despite a slow start.

Card Factory forecast a 9% to 16.6% ⁠drop in adjusted pretax profit to between 55 million pounds and 60 million pounds ($73.59 million-$80.28 million) for the year to ​end-January 2026. 

It previously expected earnings to grow by a mid-to-high single-digit percentage, underpinned by expectations of strong Christmas sales. 

Rival online gift retailer Moonpig, on the other hand, reported strong half-year revenue growth on Wednesday and ‌a good start to the second half, including Black Friday.

($1 = 0.7474 pounds)

(Reporting by Simone Lobo and Yadarisa Shabong in Bengaluru; Editing by Subhranshu Sahu and Joe Bavier)