The retailer, which went public in 2014, said pretax profit fell 14.1 percent to 23.2 million pounds, hurt by rising costs after the government raised the minimum wage.

The company said that its full-year profit will "reflect a continuation of some of the headwinds identified in the first half."

Shares in mid-cap fell 14 percent to 307 pence and were poised for their worst daily loss since listing on the London Stock Exchange.

The Chancellor in November raised the minimum wage to 7.50 pounds from 7.20 pounds, taking the edge off a benefits squeeze for low earners.

The company said profit was also hurt by a weaker pound as about half of the company's annual costs of its goods come from products sourced in U.S. dollars.

However, revenue for the six months to July at stores open for more than a year rose 3.1 percent.

Card Factory said it would also pay a special dividend of 15 pence.

(Reporting by Rahul B in Bengaluru; editing by Jason Neely and Louise Heavens)