Festive cheer was in short supply for discount greeting card chain, Card Factory, as its shares slumped by over 25 per cent, to 93.98p, after poor Christmas sales.

The desultory sales figures led Card Factory to cut its profit expectations for the full year, from forecasts of around £87 million to between £81 million and £83 million. Like-for-like sales over the last 11 months have fallen by 0.6%, leading the card and gift retailer to announce that there will be no special dividend for investors in 2020.

So, can the retailer get back to happier times or should investors consider throwing in their cards? Chief Executive, Karen Hubbard, blamed the poor performance on low customer footfall and the General Election but she foresaw more obstacles ahead with a weak pound and rising wage costs. Hubbard said Card Factory’s management is undertaking ‘a comprehensive review of its business strategy’ and it believes the opportunity for further efficiencies ‘within the current business model’ is finite.

Analysts are not completely convinced though – Peel Hunt is advising investors to sell their shares, describing the retailer’s Christmas update as “truly shocking and saying, ‘management seems to have lost all confidence.’

The fall in sales compares to just a 0.1 per cent dip for the same period one year earlier although group revenue grew by 3.6%. Online sales grew by 15 per cent and the retail chain added 47 shops to its portfolio in the 11-month period. Card Factory launched a festive families photoshoot service, drafting in celebrity couple Stacey Solomon and Joe Swash, but this still wasn’t enough to stem the sales decline.

Some analysts have remained slightly more pragmatic with Russ Mould from A J Bell suggesting that the Card Factory’s announcement not to pay a special dividend next year has had the biggest impact on its share price. He points out that an unchanged ordinary dividend of 9.3p a share still leaves the retailer on a dividend yield of 8.4 per cent but admits “the prospect of a third straight drop in annual profits will surely start to beg the question of whether even the ordinary dividend is sustainable over the long-term.”

The Card Factory is far from the only retailer to have hit hard times lately – the British Retail Consortium revealed last year was the worst year on record for high street retailers – but some have pointed out that the chain should have been able to capitalise on competitor Clintons current state of disarray following its administration and subsequent rescue deal. Analysts at Peel Hunt believe that some of the changes the Card Factory made to key lines just before Christmas were ‘a major own goal’ which has not helped sales figures.

Whether the proposed business review can deliver some cheer in time for next year remains to be seen but it will probably need to be implemented quickly to allay investors’ fears.