Moonpig shares nosedive as greeting card group suffers losses

Moonpig Group Shares plunged on Tuesday after the online greeting card retailer revealed it had suffered a first-half loss.

The London-listed group made a pre-tax loss of £33.3m in the six months to October, compared with a profit of £18.9m during the same period last year.

It recorded a goodwill impairment of £56.7m related to its experiences segment, which has faced weaker sales.

Revenue from the division, which allows customers to attach gifts such as days off, cinema tickets and spa treatments to their cards, fell by around a fifth to £14.9m in the first half.

The performance of the experiences also reflected the additional temporary “breakage” income from the previous year due to expired vouchers purchased during the pandemic.

However, this was offset by sales growth of 10 per cent to £118m in its Moonpig business thanks to higher order volumes and strong results in Britain, the US and Australia.

The London-based company’s total revenue rose 3.8 per cent to £158 million, while its adjusted pre-tax profits rose 9 per cent to £27.3 million.

Moonpig declared its first interim dividend and raised its medium-term adjusted earnings ahead of its unpleasant margin target to a range of 25 to 27 percent.

But Moonpig shares fell 12.2 per cent to 235p at midday, making them the second biggest fallers on the FTSE 250 index behind NCC Group.

Nickyl Raithatha, chief executive of Moonpig, said the group’s expansion had been supported by its investment in technology and the “structural market shift” towards the online sector.

He added: “The increase in our medium-term profit margin target demonstrates our confidence in the prospects of the business.”

Founded by former Dragons Den star Nick Jenkins, Moonpig has struggled to achieve significant sales growth since listing on the London Stock Exchange three years ago.

Trade soared throughout 2020 and 2021 as Covid-related restrictions on retail stores led to more people buying greeting cards online.

But the easing of those restrictions has led to a rebound in store sales, while inflationary pressures have deterred consumers from buying expensive experiential gifts.

Dan Coatsworth, investment analyst at AJ Bell, said: “It’s having to work hard to continue to grow and diversify into other areas, such as experiences that haven’t gone well.”

“Many people are still watching their money and more expensive experiences, like getting people to sign up for a day at the racecourse or a spa treatment, are a tough sell in the current economic environment.”

Moonpig has kept its annual revenue outlook the same in part due to challenging conditions affecting its experiences business.

Consensus forecasts are that the company’s turnover will rise 5.8 per cent to £361m in financial year 2025 and its adjusted pre-tax profits will reach £60.2m.