Moonpig shares a slide as he says he will focus on ‘resilient’ greeting cards amid economic uncertainty despite buying Red Letter Days owner
- Moonpig completed the acquisition of Smartbox Group two months ago
- The company’s stock price has fallen about 47% in the past 12 months
- The easing of Covid restrictions has 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 during tough economic times.
The statement came despite Moonpig completing the acquisition of Smartbox Group, the owner of experiences retailer Red Letter Days, two months ago for £124million.
Ahead of its annual general meeting today, Moonpig, founded by former Dragons Den star Nick Jenkins, said selling greeting cards would be a priority in the current economic situation.
The London-based company claimed that demand for greeting cards has a “demonstrable track record of resilience” during good and bad economic times.
New focus: Ahead of its annual general meeting today, Moonpig said selling greeting cards would be a priority in the current economic situation
However, investors reacted badly to the trade update and Moonpig Group shares fell 7.5% to £1.85 by late afternoon, meaning their value fell around 47% in the last 12 months.
Moonpig has expanded its sale of gifts, such as chocolate, flowers and champagne in recent years to increase revenue and margins.
But the easing of Covid-related restrictions has caused a slowdown in the online retail sector as consumers have resumed shopping on the high street.
In the 12 months to the end of April, London-based Moonpig saw a 17.3% drop in revenue as it processed more than 11 million fewer orders, although sales still increased by about three-quarters on a two-year basis.
Average order size also increased by 5.9% thanks to growth in attached 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 robust demand for cards has contributed to year-over-year average order value growth, while margin trends have remained healthy thanks to the lack of inflation. major input cost.
Managing Director Nickyl Rainatha remarked that Moonpig “continues to deliver a powerful and unique combination of market-leading positions, strong customer loyalty, high profit margins and robust 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 it expects the business to return to pre-Covid seasonal business models, with around 58-60% of annual revenue expected to be realized in the second half of the fiscal year.
However, Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, warned the earnings outlook “could be wishful thinking” for the company.
She added: “Many more shoppers are expected to tighten their purse strings over the coming months and hunt for bargains as household bills rise.
“Searching for cheaper cards and gifts is likely to be a priority for many people, rather than spending money on personalized items.”