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Moonpig’s share price fell 15 per cent after the company lowered its annual revenue guidance, blaming it on disruption from Royal Mail strikes and consumers opting for cheaper gifts.
The online greeting card and gift seller now expects revenue of £320mn this year, down from previous estimates of £350mn. The share price fell to 126p, just over a third of its 350p price at its initial public offering last year.
Pre-tax profit fell from £18.7mn to £9mn in the six months to the end of October, while revenue was flat at £143mn year on year, although it improved its profit margins.
“Even though we’ve got a consumer spending crisis, and industrial action by Royal Mail which obviously isn’t helping, we’ve maintained our profit expectations,” chief executive Nickyl Raithatha told the Financial Times.
Trading conditions had become “progressively more challenging through October and November” because of “continued macroeconomic uncertainty”, Moonpig said in a statement. Cash-strapped shoppers have been trading down, and its next-day delivery for cards and gifts has been disrupted by rolling strike action by postal workers at Royal Mail.
Moonpig was founded in 2001 and had been growing steadily since. It was a pandemic winner that benefited from the temporary closure of brick-and-mortar competitors such as Card Factory, as well as an increase in the number of people sending cards when in-person events and celebrations were banned.
Its momentum led it to an IPO in February 2021, with a valuation of £1.2bn. Its share price peaked at 488p in June last year. But since then, Moonpig shares have fallen almost two-thirds as shops reopened and consumers bought less expensive gifts amid the cost of living crisis.
Analysts from Jefferies called the results “mixed”, noting that “macro effects [are] weighing further on the gifting side of the business”.
“Management is not flustered by the slower pace of sales, but is realistic enough to know that lower consumer confidence and the Royal Mail strikes will have a short-term impact on sales at a crucial time, so is reining in current year guidance,” said analysts at Peel Hunt.
Moonpig, which also owns Dutch card retailer Greetz, has built a data business that issues 79mn reminders to customers for significant dates such as birthdays and anniversaries. Raithatha said that customer loyalty would allow them to weather the current economic climate, adding that 90 per cent of the revenue came from existing shoppers.
The company is expanding its offering into experiences, having recently completed the acquisitions of two companies, Red Letter Days and Buyagift, which offer experiential gifts.
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