Moonpig, the net greetings card and gifting retailer, has reported a half-year pre-tax lack of £33.3 million after writing down the worth of its “experiences” division by greater than £50 million, underscoring the challenges posed by faltering client confidence in higher-priced discretionary treats.
The loss for the six months to October compares with a £18.9 million revenue in the identical interval final yr. Moonpig blamed the reversal on a £56.7 million impairment taken in opposition to its experiences arm, which launched final yr and accounts for roughly 10 per cent of its enterprise.
The write-down comes simply two and a half years after Moonpig acquired Buyagift and Purple Letter Days for £124 million from Otium Capital. Whereas these manufacturers provided 1000’s of actions from afternoon tea at Harrods to trace days on the Prime Gear circuit, Moonpig’s chief govt Nickyl Raithatha acknowledged that persuading customers to spend £80 to £90 on such presents stays robust in a cost-sensitive surroundings.
“This is our smallest segment, and it’s bearing the brunt of the macroeconomic headwinds,” stated Raithatha. “Consumers are more hesitant to splurge on premium-priced discretionary items.”
The market reacted swiftly, sending Moonpig’s shares down 14.6 per cent, or 39p, to 228½p. Since its £1.2 billion flotation in February 2021 at 350p per share, the inventory has misplaced practically 44 per cent of its worth.
Raithatha emphasised that the experiences division is present process a “full transformation.” Past management adjustments and outsourcing non-core duties, the group will reposition the product combine and introduce extra inexpensive choices to reinvigorate the section. The chief govt maintains that that is all that is still on the turnaround “to-do list.”
Regardless of the setback, Moonpig stays assured about its core operations. Group income rose 3.8 per cent to £158 million, buoyed by a ten per cent annual enhance in gross sales on the core Moonpig model. This development helped offset the downturn in experiences and a 4 per cent decline at its Netherlands-based subsidiary, Greetz. The lively buyer base throughout Moonpig and Greetz additionally grew to 11.7 million, up from 11.3 million a yr earlier.
Moonpig’s management insists the marketplace for greeting playing cards and small-value presents stays resilient even amid mounting cost-of-living pressures and rising postage prices. “We’ve seen no dent in customer demand for cards,” Raithatha stated. “Younger people continue to buy them, and geographically, demand has held steady.”
Trying forward, Moonpig expects to fulfill full-year income steering and stay on a development trajectory. It’s focusing on double-digit income will increase and improved revenue margins over the medium time period, banking on the enduring attraction of greeting playing cards and the potential to re-energise its experiences providing.
Analysts at Peel Hunt had been equally optimistic, describing the experiences efficiency as “weak” however noting the core enterprise’s ongoing energy and operational efficiencies which might be bolstering the underside line. “We continue to believe in the equity story,” Peel Hunt stated, reflecting a sentiment that Moonpig’s non permanent setback in experiences needn’t outline its longer-term prospects.
