The group - which specialises in greeting cards, wrappings and gifts - reported a 12.3% fall in pre-tax profits to £72.6 million for the year to January 31 after its profit margins were hammered by rising costs as the Brexit-hit pound and national living wage took their toll.
It confirmed that earnings growth in the new financial year will also be “limited” amid ongoing cost pressures, despite efforts to offset this with savings across the business.
Card Factory saw shares tumble in January after it warned over the impact of a margin squeeze on its profits.
But in its full-year results, the firm cheered a solid performance across its 915 UK stores in the face of “tough” trading conditions, with group like-for-like sales up 2.9% - a pick-up from 0.6% growth the previous year.
Chief executive Karen Hubbard said: “From a profit perspective, we faced strong headwinds of £14.6 million in the year, principally due to the combined impact of foreign exchange and national living wage.
“Our cost-saving initiatives during the year provided substantial mitigation and we have laid the foundations for further efficiencies to be delivered in the future.
“However, given the continuing headwinds, and, as previously stated, any EBITDA (underlying earnings), growth in full-year 2018-19 is likely to be limited.”
The firm expects the cost pressures from the weak pound and living wage to ease in 2019-20 as it delivers a raft of “significant” cost-saving initiatives.
It added that sales have continued to hold up well in the current year, saying it was “satisfied with the start we have made and particularly pleased with the record seasonal performances from Valentine’s Day, Mother’s Day and Easter”.
Card Factory opened 50 stores over the past year, including six trial shops in Ireland.
It plans to open further outlets and continue to grow its online arm, which saw sales jump 67% higher over the year.