Card Factory has seen its profit before tax (PBT) fall by 31.5% year-on-year to £43.9m in the 12 months to 31 January, after operating against a "challenging consumer backdrop".

The greeting cards and gift retailer said its adjusted PBT dropped by 15.2% to £56m, which is said reflecting the impact of UK footfall on stores transactions and sale in its key trading season.

In this period, its earnings dropped by 8.4% to £116.8m, despite a 7.4% increase in its revenue, which totalled £582.7m. It said that this was supported by positive contributions from acquired businesses.

Card Factory opened 27 net new stores in the year to 31 January, taking its total UK and Republic of Ireland footprint to 1,117 stores.

Furthermore, it added that its acquisition of Funky Pigeon in August has strengthened its market position and its capability in online card plus attached gifting and direct-to-recipient market.

The retailer stated that its ‘Simplify & Scale’ programme has continued to mitigate inflation through "proven efficiency and productivity programme". Over the year, it has delivered £21m of benefits, including 9% store efficiency improvement through operational and range optimisation, alongside warehouse efficiencies and benefits from range and pricing.

Chief executive officer at Card Factory, Darcy Willson-Rymer, stated: "Despite a challenging consumer backdrop in FY26, we continued to execute our strategy to transform Card Factory into a global celebrations group, underpinned by targeted investment and disciplined cost management. We are encouraged by the positive contributions of our acquired businesses, with the acquisition of Funky Pigeon accelerating our digital capabilities and strengthening our platform for future online growth.

"The group remains highly cash generative, and our 'Simplify & Scale' efficiency and productivity programme will continue to help mitigate inflationary headwinds. We remain committed to disciplined capital allocation and progressive shareholder returns, which is reflected in the proposed final dividend and a commitment to commence a £15m share buyback programme."

In its outlook, Card Factory said that its total group sales, excluding the incremental benefit of Funky Pigeon, through the first three months of the financial year, are in line with the period in the prior year.

It added that it is cognisant of the situation in the Middle East and the potential for impact on director input costs such as container rates, energy and fuel surcharges. Furthermore, it stated that the ongoing geopolitical instability also creates uncertainty in relation to inflation and consumer sentiment.

While Card Factory is mindful of this backdrop, its board expects its adjusted PBT to be in line with the current market consensus, which ranges from £54.8m to £60.5m.

Following the announcement, shares in Card Factory fell by over 2%.

Head of markets at AJ Bell, Dan Coatsworth, said that the results have "no cause for celebration", with the firm having to brace for new inflationary pressures.

He concluded: "In theory, Card Factory’s value-led proposition should work in its favour if consumers are feeling hard up. However, it is still at the mercy of consumer sentiment, and many people might not feel a card, excluding a birthday one, is an essential purchase. A shift into gifts makes Card Factory even more vulnerable to a drop in discretionary spend if the backdrop gets tougher.

"The key reason why the shares moved higher on the results was proof that Card Factory can keep generating solid cash flow even in harder times. A new share buyback, while small in value at £15m, also sends a positive signal to the market that the business is down but not out."

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