Moonpig shares a dive as the greeting card group swings toward loss

Moonpig Group shares fell on Tuesday after the online greeting card retailer revealed it had fallen in the first half of the year.

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

It recorded a £56.7 million goodwill impairment charge related to its experiences segment, which saw weaker sales.

Sales at the division, which allows customers to link gifts such as days out, cinema tickets and spa treatments to their card, fell by around a fifth to £14.9m in the first half.

Experiences performance also reflected the previous year’s temporary additional ‘breakage’ revenue from expired vouchers purchased during the pandemic.

However, this was offset by 10 percent sales growth to £118 million at the Moonpig business thanks to higher order volumes and strong performance in the UK, US and Australia.

The London-based company’s total turnover rose 3.8 percent to £158 million, while adjusted pre-tax profits rose 9 percent to £27.3 million.

Moonpig declared its first-ever interim dividend and boosted its medium-term adjusted earnings (before the nasty 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 FTSE 250 Index’s second biggest faller after NCC Group.

Nickyl Raithatha, CEO of Moonpig, said the group’s expansion was underpinned by its investments in technology and the “structural market shift” to online.

He added: ‘Increasing our medium-term profit margin target demonstrates our confidence in the prospects for the business.’

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

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

But the easing of such restrictions led to a recovery in retail sales, while inflationary pressures have discouraged consumers from buying expensive experiential gifts.

Dan Coatsworth, investment analyst at AJ Bell, said: “Continuing to grow and diversify into other areas such as experiences has taken a lot of hard work, but it hasn’t been smooth sailing.

‘Many people are still watching their money and the higher-end experiences, such as getting people to sign up for a day at the track or a spa treatment, are a tough sell in the current economic climate.’

Moonpig has left its annual revenue guidance unchanged, in part due to the challenging conditions impacting its experiences business.

Consensus forecasts show the company’s turnover will rise 5.8 percent to £361 million in the 2025 financial year and adjusted pre-tax profits will reach £60.2 million.