The Daily Observer London Desk: Reporter- Kathryn Williams
Moonpig anticipates rebounding to turnover growth during the next financial year despite a more challenging economic backdrop.
The online greeting cards retailer has struggled to boost sales since the relaxation of Covid-related lockdown restrictions encouraged more consumers to start buying their cards and gifts in stores again.
Trading has also been hit by rising inflation, weaker consumer spending and Royal Mail postal staff strikes, which impacted last-minute card-only orders in particular across the UK last Autumn.
Difficulties: Moonpig has struggled to boost sales since the relaxation of lockdown restrictions encouraged more consumers to start buying their cards and gifts in stores again
Reflecting these headwinds, the London-based firm downgraded its annual revenue outlook for the 12 months ending April by around £30million to £320million last December.
But it told investors on Thursday that it was upholding that guidance, as well as its yearly adjusted underlying earnings forecast, following record weekly sales ahead of Mother’s Day a fortnight ago.
The business, founded by former Dragons’ Den star Nick Jenkins, forecasts a return to turnover growth in the 2024 fiscal year, buoyed by strong demand in the latter half of the period.
Chief executive Nickyl Raithatha said: ‘Moonpig Group’s leading market positions, strong customer retention, high profitability and robust cash generation equip us to navigate all stages of the economic cycle.
‘We are excited to return to revenue growth in the year ahead, underpinned by continued investments in our technology, marketing and operational capabilities.
‘As the clear online leader in greetings cards, Moonpig Group is well positioned to benefit from the long-term structural market shift to online.’
Moonpig Group shares jumped over 16 per cent in early trading before ending the day 10.65 per cent up at 125.7p, making them the FTSE All-Share Index’s second-biggest riser.
However, their value has slumped by around 64 per cent since floating in February 2021 when there was a surge of technology firms listing in London.
The stock also remains one of the most shorted among London-listed companies, with five major fund groups, including Marshall Wace and BlackRock, all taking significant bets against Moonpig.
Last September, the retailer declared it would prioritise selling greeting cards due to their ‘demonstrable track record of being resilient’ across both good and bad economic conditions.
Russ Mould, investment director at AJ Bell, said: ‘Since joining the stock market, Moonpig has been at pains to explain its strategy of generating revenue from a broader base of items and to smooth out its revenue across the year.
‘Gifts were the key to its growth, offering people the convenience of being able to send chocolates, flowers, or even facilitating a skydive. That part of its growth plan hasn’t quite worked out as planned.
‘Ultimately, Moonpig still has a big job to prove that it can deliver on the hype around the stock at the time of its IPO. Namely proving there is structural shift to buying goods online.’
