Card Factory’s profits plummet blamed on rising wages

Card Factory blamed the decline in profits for escalating expenses, including an increase in the national minimum wage rate.

In the retailer’s report for the half-year period ending in July, pre-tax profit had fallen by 43% to PS14million despite a 3.7% increase in store sales.

The business has almost 1,000 stores in the UK and Ireland. According to them, the profits dropped by PS64.4m in six months due to wages for store and warehouse staff.

Card Factory said that the profit drop was due to “substantial increases of national living wage”, as well as freight inflation and “phasing out strategic investments”.

Darcy Willson Rymer, chief executive officer of the company, remained optimistic about its performance. He said: “As the company enters the second half of this year, and the crucial Christmas period, we remain optimistic about the performance for the entire year. We continue to manage inflationary pressures in the business.

Our strategic growth plans are supported by our strong balance sheet, solid cash flow and disciplined management of working capital. We also focus on driving productivity and efficiencies across the company. We believe that we have a compelling proposition for the future, one that will resonate with a wide customer base, and deliver unmatched quality, value, and choice.

The national living wage for those over 21 years old increased 9.8% in April to PS11.44 an hour. In the past, hourly wages for 21-22 year olds were PS10.18 and PS10.42 respectively.

Brightmine data from July showed that the 9.8% increase in the national living wage, which took place in April, had continued to impact the median basic salary award. It was almost three percentage points higher than inflation.

Paydata, a HR consultancy, found that the increase in national living wages contributed 1% more to employers’ total pay bills.

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