Moonpig shares dive as FY revenue forecast lowered, H1 profits halved

Greetings card maker Moonpig on Wednesday lowered full-year sales forecasts as it warned that trading conditions had become “progressively more challenging” through October and November and Royal Mail Strikes had also hit orders.

The company on Wednesday said it now expected full-year revenue to be approximately £320m, down from a previous forecast of £320m. Interim pre-tax profits fell 51.2% to £9.1m on flat sales of £142.8m.

“Trading at Moonpig and Greetz (the firm's Dutch operation) reflected the more challenging conditions seen from October onward and was also impacted in the UK by industrial action at Royal Mail during September and October, which affected last-minute card-only orders around each strike day” the company said.

Total orders fell 13.3%, partly due to strike action by members of the Communication Workers Union over pay and conditions, and a tough comparator from last year when profits surged due to Covid restrictions on non-essential shops.

Hargreaves Lansdown analyst Sophie Lund-Yates said: “Operational disruption has resulted in a disappointing downgrade, which has sent shares tumbling. The real issue here is that these challenges are likely to rear their head again until the ongoing dispute can be ironed out."

“It’s also going to put customers off using the service at all. If you can’t guarantee your card will make it in time, there’s little motivation to pay the premium charged by online card-sellers ... swapping providers increases operational risk and would be a long, protracted process at the best of times."

“The other disappointing development is that customers are reducing the amount they spend on gifts. These lucrative add-ons are an important pillar for margin growth but the sad truth is that while the cost of living crisis cruises on, people are simply not inclined to throw chocolates and flowers into their virtual baskets. Sadly, this is also a trend likely to persist at least into the first quarter of next year and massively limits margin potential.”

Reporting by Frank Prenesti for Sharecast.com