Card Factory has warned that it is set to breach its banking covenants by the end of this month after sales were battered by the coronavirus pandemic.
Shares in the card retailer dipped after it said it expects to breach the terms of its £200 million bank loan following the impact of the November and current lockdowns in England.
Card Factory told investors on Thursday that sales fell by about a third, 33.7%, to £281.4 million in 2020.
It said the slump was driven by lower store sales, which slid by 38.1% after its stores were forced to shut completely for 37% of potential trading days.
Its online channels performed “strongly” over the period, with cardfactory.com reporting 137% growth in like-for-like sales, while its trade sales grew by 63%.
The retailer said it expected to report a pre-tax loss of about £10 million for the year, compared with a profit of more than £65 million in the prior year.
Rival card-seller Paperchase filed a notice to appoint administrators last week after it also felt the impact of coronavirus restrictions.
Meanwhile, online competitor Moonpig has disclosed plans to float on the London Stock Exchange in a move expected to value it at more than £1 billion after posting a 135% sales jump in the six months to October as the pandemic drove more customers online.
Paul Moody, executive chairman, said he is “confident” that Card Factory has the opportunity to return to sustainable growth despite facing uncertainty over the first half of 2021.
“In a year the like of which none of us have ever experienced before, I am hugely proud of the way in which the Card Factory family has risen to the many challenges faced and want to thank every colleague for their huge commitment,” he said.
“Throughout 2020 we unwaveringly did all that was necessary to protect our colleagues and customers, making our stores one of the most Covid-secure shopping experiences available.
“The financial investment has been significant, but critical to enabling us to meet our social responsibility.”
Card Factory shares moved 4.4% lower to 38.35p in early trading on Thursday.