January 11, 2018 / 8:59 AM / in 7 months

Shares of Card Factory plunge on lower profit forecast

Jan 11 (Reuters) - Shares of British greeting cards retailer Card Factory were on track for their worst single day since listing after predicting lower core earnings for 2017 on tighter margins.

The retailer, which went public in 2014, said it expects underlying EBITDA for the year ended Dec. 31 to come in between 93 million pounds-95 million pounds ($128.10-$125.40 million). The range is lower than 98.5 million pounds reported last year.

Shares of the company were down 21 percent at 222.8 pence at 0846 GMT, making them the top drag on the FTSE Mid Cap index.

The retailer, which sells most of its products for under a pound, said like-for-like sales in the Christmas trading period were driven by lower margin non-card categories, such as gifts and dressings.

The company said profit would be hurt by previously flagged pressure from a weaker pound, as about half of the company’s annual costs of its goods come from products sourced in U.S. dollars, and higher costs for wages.

Britain’s finance minister in 2016 raised the minimum wage to 7.50 pounds from 7.20 pounds.

The company said it expects the combined impact of foreign exchange and wage inflation to result in 7 million to 8 million pounds of additional costs in 2019

“...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,” its Chief Executive Karen Hubbard said on Thursday. ($1 = 0.7416 pounds) (Reporting by Rahul B in Bengaluru; Editing by Bernard Orr)

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