Moonpig forecasts return to sales growth in upcoming fiscal year
Moonpig predicts a return to sales growth as the greeting card seller has record sales for Mother’s Day
- Moonpig has struggled to boost sales since the easing of Covid restrictions
- Trade has deteriorated as rising inflation dampens consumer spending
- Shares in Moonpig Group were the highest FTSE 350 risers on Thursday morning
Moonpig expects sales growth to recover in the next financial year, despite a more challenging economic situation.
The online greeting card retailer has struggled to boost sales since the easing of Covid-related lockdown restrictions encouraged more consumers to return to buying their cards and gifts in stores.
Trade was also hit by rising inflation, weaker consumer spending and strikes by Royal Mail’s postal staff, who suffered from last-minute card-only orders, particularly in the UK, last autumn.
Difficulties: Moonpig has struggled to boost sales since the easing of lockdown restrictions encouraged more consumers to buy their cards and gifts in stores again
As a result of these headwinds, the London-based company cut its annual revenue forecast for the 12 months ending April by around £30m to £320m last December.
But it told investors Thursday it maintained that outlook, as well as its annually adjusted forecast for underlying earnings, following record weekly sales ahead of Mother’s Day two weeks ago.
The company, founded by former Dragons’ Den star Nick Jenkins, forecasts a return to revenue growth in fiscal 2024, supported by strong demand in the second half of the period.
Chief executive Nickyl Raithatha said: ‘Moonpig Group’s leading market positions, strong customer retention, high profitability and robust cash generation enable us to navigate all stages of the economic cycle.
“We are excited to return to revenue growth in the year ahead, supported by continued investments in our technology, marketing and operational capabilities.
“As a clear online leader in greeting cards, Moonpig Group is well positioned to benefit from the long-term structural market shift to online.”
Moonpig Shares rose 16.1 percent to 131.9p in early trading after the announcement, becoming the FTSE 350 Index’s biggest riser.
However, their value is down about 62 percent since going public in February 2021, when a wave of technology companies listed in London.
The stock also remains one of the most short-positioned companies among London-listed companies, with five major fund groups, including Marshall Wace and BlackRock, all making significant bets against Moonpig.
Last September, the retailer stated it would prioritize greeting card sales because of their “demonstrated track record of resilience” in both good and bad economic conditions.
Russ Mould, director of investment at AJ Bell, said: ‘Since entering the stock market, Moonpig has gone to great lengths to explain its strategy to generate income from a broader base of assets and to flatten its earnings over the year .
“Gifts were key to growth and gave people the convenience of being able to send chocolates or flowers or even enable a skydive. That part of the growth plan did not quite materialize as planned.
Ultimately, Moonpig still has a big job to prove that it can live up to the hype around the stock at the time of the IPO. Namely proving that there is a structural shift to buying goods online.’