Shoppers hunting for birthday and anniversary presents are forking out for cheaper options and hesitating to send cards due to postie walk-outs, Moonpig’s boss has said.
Ongoing disruption from Royal Mail strike days was “clearly not helpful” to the greetings cards business, CEO Nickyl Raithatha told CityA.M., as customers expected deliveries on specific days.
Customers “are going to hesitate” before ordering cards around strike days, he warned.
“We’re in the business of helping people send gifts to people for specific days” he said, comparing it to ordering a T-shirt where the delivery date “doesn’t really matter.”
The greetings card retailer saw its profit before tax take a knock to the tune of around 50 per cent over the past six months.
It also warned that trading had become more challenging in recent months, as consumers face pressure with household bills rising across the board.
There was evidence of customers trading down by opting for Prosecco instead of champagne gifts, Raithatha added.
The London-listed retailer posted a reported profit before tax of £9.1m for the six months to 31 October 2022, as the country re-adjusted to life without Covid-19 restrictions.
It had posted a profit of £18.7m for the equivalent period the previous year.
Moonpig fared well in Covid lockdowns when Brits swerved the high street in favour of e-commerce options.
Profit reductions this year were down to extra costs including its acquisition of experience retailer Buyagift, plus extra interest costs.
Bosses then admitted that trading conditions “have become progressively more challenging through October and November” as consumers feel the pinch from elevated energy bills.
While the retailer said it was sticking to its full-year expectations for adjusted EBITDA, it said it was now expecting its revenues to come in at a lower £320m estimate.
Moonpig said it had faith in the greetings card category as having “a long track record of stability and resilience through recession.”
Revenue for the past six months was flat at £142.8m compared to the previous year, however sat at 115 per cent higher than the equivalent period in 2019.
Moonpig’s share price plunged by as much as 17 per cent on Wednesday morning.
However, Peel Hunt analysts described this drop as “an overreaction” and said an investors call “revealed no demons” that would rationalise a double-digit percentage fall in shares.
In the first-half of the year, Moonpig completed a unified tech platform for its business and Greetz, as well as takeovers of Red Letter Days and Buyagift.
As consumers battle high household bills, Moonpig said it had seen shoppers “trading down to lower gifting price points” while levels of new customer acquisitions have also dropped year-on-year.
A new ‘Moments For Less’ gift range was targeting the more budget-conscious shoppers, with more gifts coming in around £10-15, such as customisable mugs.
Card-only orders in the UK were also impacted by industrial action at Royal Mail during September and October.