Moonpig shares slip as outlook underwhelms Ltd updates

Revenues at card retailer Moonpig more than doubled in the year to April, but its shares fell after parts of its latest forecast fell short of expectations. 

Moonpig benefited from lockdowns, as shop closures and a ban on social gatherings prompted people to send cards and gifts instead. The company floated with a £1.2bn valuation in early February. 

In its first full-year results since its initial public offering, Moonpig reported a 113 per cent rise in revenues to £368m in the year to April. That was above consensus forecasts of £351m thanks to a slower easing of restrictions than anticipated. About a quarter of revenues came from new customers during the year.

Profits before exceptional items jumped from £33.2m to £74.6m, although IPO costs and share-based payment schemes meant that statutory pre-tax profit of £32.9m was only slightly higher than the previous year.

Margins at the core Moonpig business also shrank during the year as the company used promotions “to drive migration to the app and to incentivise reminder setting”, although they increased at the smaller Greetz operation in the Netherlands.

Moonpig’s shares, which floated at 350p and peaked at 488p in early June, fell 6 per cent in morning trading in London to 399p. Jonathan Pritchard, at Peel Hunt, said some in the market had been hoping for a bigger upgrade to guidance for the current year.

Moonpig expects revenues of £250m to £260m for the current year, below last year’s pandemic-boosted high but a 45 to 50 per cent increase on 2020 sales. It had previously forecast a 34 to 38 per cent increase on pre-pandemic levels.

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“When your starting point is five times sales and 45 times earnings you need to do a bit better than ‘moderately ahead’,” said Pritchard, referring to Moonpig’s outlook statement.

Such highly rated shares “need the constant oxygen of upgrades”, he added.

Chief executive Nickyl Raithatha said that as conventional card shops reopened and restrictions on socialising were lifted, customers had purchased cards less frequently than they did during full lockdowns.

He added that the company had expected that purchase frequency, a key metric, would fall. “But we’ve seen a slower drop than expected”.

“We still believe purchase frequency will be higher after the pandemic than before it . . . we are very confident that our share of the overall card market will grow,” he added.

In the run-up to the company’s IPO, Moonpig disclosed that customers bought an average of three cards a year from the company, out of an average annual total of 23 card purchases.

Raithatha also said that Moonpig’s historically strong customer retention looked set to continue, with customers acquired over the past year showing similar purchase patterns to previous groups.

But he added that the company would invest some of its sales growth in marketing and technology to “drive loyalty”.

He cited a month-long promotion that would allow recipients of a Moonpig gift to send a physical thank-you card to the sender free of charge as an example. “Obviously there is a cost to that, but it brings more people into the ecosystem,” he said.



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