Shares of Wakefield-based greeting card and gift retailer Card Factory plc fell about 7% on Thursday as it warned investors it anticipates that its current covenants will be breached at the end of January and that it expects to make a loss before tax of  £10 million

“Whilst our short term cash requirement can be covered within our existing £200m bank facility, we anticipate that current covenants will be breached at the end of January as the significant impact of the November and current national lockdowns are reflected in our trading performance,” said Card Factory.

“We continue to have constructive discussions with our banking syndicate.”

In a trading update for the eleven months ended December 31, 2020, Card Factory said it expects full year revenue of about £284 million, significantly lower that the £451.5 million pounds reported in the previous year.

The firm reported that gross store sales year-on-year declined 38.1% “where mandatory store closures prohibited openings for 37.0% of available trading days” but its online business continues to perform very strongly with cardfactory.co.uk “achieving +137% LFL during the period and gettingpersonal.co.uk achieving +10% LFL.”

Card Factory’s biggest shareholder is Switzerland-based activist investor Teleios Capital Partners with a stake of about 19.5%.

Card Factory executive chairman Paul Moody 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.

“We have successfully pursued key strategic aims, including the acceleration of our digital capability, a streamlined and more effective ‘newness’range cycle, the implementation of a pricing architecture enabling material retail price progression, auto-replenishment and stock management in store, utilising hand-held technology and bringing ESG to the fore in our decision making.

“I remain convinced that the Card Factory brand, and quality with value proposition, resonates strongly with customers.

“Despite the obvious uncertainties in the first half of 2021, I am confident that we have the opportunity to return the business to sustainable profitable growth and will do all that is necessary in the near term to ensure that we can maximise that opportunity.”