The firm, which operates more than 1,000 stores, reported a 5.2 per cent drop in like-for-like sales at its core Clinton business for the nine weeks to 5 October, while its loss-making Birthdays operation posted a 2.5 per cent fall. The greetings cards retailer also unveiled pre-tax losses of £13.1 million for the year to 3 August, compared with profits of £15.1m in 2007.

The group's chairman, Don Lewin, said the board was "taking a prudent view and conserving resources where possible", meaning a final dividend of 1p per share – down from 1.7p in 2007. The company cited "uncertainty over the coming months surrounding the economy and the high street in particular".

Broker Numis Securities expects Clinton's profits to drop to £10m for the year to July 2009. Despite the tough outlook, Numis said the group may benefit through the economic downturn as competitors fall by the wayside. Celebrations Group, which owns Card Warehouse and Cardfair, went into administration last week.

Lewin said he remained hopeful about trading over Christmas and the spring. "We believe that our product offering and brand positioning may provide a degree of resilience during these uncertain times," he said.

Clinton Card shares closed 19 per cent lower yesterday.