Moonpig shares fall as it says it will focus on ‘sturdy’ greeting cards amid economic uncertainty despite buying Red Letter Days owner
- Moonpig completed the acquisition of Smartbox Group two months ago
- The company’s share price has plunged about 47% in the past 12 months.
- Easier Covid restrictions have caused a slowdown in the online retail sector
Moonpig shares fell despite a strong trading update as it said it would focus on greeting card sales in tough economic times.
The statement came despite Moonpig completing the acquisition of Smartbox Group, the owner of experience retailer Red Letter Days, two months ago for £124m.
Ahead of its annual general meeting today, Moonpig, founded by former Dragons Den star Nick Jenkins, said greeting card sales would take priority in the current economic climate.
The London-based firm said demand for greeting cards has a “demonstrable track record of resilience” during good and bad economic times.
New approach: Ahead of its annual general meeting today, Moonpig said greeting card sales would take priority in the current economic climate.
However, investors responded poorly to the trading update, with shares in Moonpig Group falling 7.5% to £1.85 by late afternoon, meaning its value has plunged around 47% in the last 12 months.
Moonpig has expanded its sale of gifts such as chocolate, flowers and champagne in recent years as a way to boost revenue and margins.
But the relaxation of covid-related restrictions has caused a slowdown in the online retail sector, as consumers have returned to shopping on the high street.
In the 12 months to the end of April, London-based Moonpig reported a 17.3 percent drop in revenue as it processed more than 11 million fewer orders, though sales still rose by about three-quarters. in two years.
Average order size also increased by 5.9 percent thanks to growth in bundled gifts. At the same time, its share of the greeting card market in the UK and the Netherlands exceeded two-thirds.
Since then, the company said strong card demand has helped average order values grow year-over-year, while margin trends have remained healthy thanks to the absence of major inflation in shipping costs. the supplies.
CEO Nickyl Rainatha commented that Moonpig ‘continues to offer a powerful and unique combination of market-leading positions, strong customer retention, high profit margins and strong cash generation.
“In the current macroeconomic environment, our continued performance reflects the strength of our data-driven business model and the long-term opportunities in our markets.”
Moonpig further announced today that he predicted the business would return to pre-Covid seasonal business patterns, with around 58 to 60 per cent of annual revenue to be realized in the second half of the fiscal year.
However, Hargreaves Lansdown senior investment and markets analyst Susannah Streeter warned that this earnings outlook “could be wishful thinking” for the company.
He added: ‘Many more buyers are expected to tighten their wallet strings in the coming months and look for deals as household bills mount.
“Looking for cheaper cards and gifts is probably a priority for many people, rather than spending money on personalized items.”