Moonpig delivers mixed update, but unveils new £60m buyback

(Sharecast News) - Greeting cards and gifts retailer Moonpig delivered a mixed fourth-quarter update on Thursday, with full-year revenues slightly missing expectations but margins at the top end of guidance, as it unveiled plans for a new share buyback. Ahead of the close of its financial year, which ends on 30 April, the company said annual revenues would be between £350m and £353m, up from £341.1m the year before but slightly short of the current consensus forecast of £354m.

However, adjusted EBITDA margins should be at the top of the 25-27% guidance range, with double-digit percentage growth expected in adjusted earnings per share.

The company, which operates in the UK and the Netherlands, said it saw a softer start to the second half at the Greetz division, which offers gifts like flowers, chocolate, balloons and beverages alongside the main card offering, though recent trading has improved.

Given strong free cash flow generation, the board has decided to launch a new £60m share buyback which will commence in the next financial year.

Commenting on Thursday's update, analyst David Hughes from broker Shore Capital said Moonpig continues to be a "highly cash-generative business", with high profit margins, low capex requirements and negative working capital.

"With the elevated debt levels following the Buyagift acquisition now well under control [...] this cash generation translates into a step up in the share buyback programme," Hughes said.

"Key for the business going forward will be delivering on sales in the Greetz and Buyagift divisions alongside core Moonpig brand, and with this we see the potential for a return to high-single digit growth alongside these enviable margins."