Moonpig swings to first-half loss

(Sharecast News) - Moonpig said on Tuesday that it swung to a pre-tax loss in the first half as it pointed to "challenging" trading in its Experiences segment. In the six months to the end of October, the greeting cards and gift retailer swung to a reported pre-tax loss of £33.3m from a profit of £18.9m in the same period a year earlier. Adjusted pre-tax profit was up 9% at £27.3m.

Moonpig said trading conditions in Experiences remained "difficult", with revenue down 20.8%.

"In the context of the challenging macroeconomic environment, we now expect a longer timeline for fully realising the revenue growth potential of Experiences," it said. This is reflected in a £56.7m non-cash charge for the impairment of Experiences goodwill at 31 October 2024.

Group revenue rose 3.8% to £158m during the half, driven by double-digit growth at the Moonpig brand, where revenue increased 10% year-on-year, underpinned by growth in orders.

Greetz revenue fell 4%, although this was an improvement on the 5.3% decline seen in the second half of the previous year.

The company declared an inaugural interim dividend of 1.0p per share.

Moonpig said that for the medium term, it continues to target double-digit percentage annual revenue growth.

However, to reflect continued growth of high-margin revenue streams such as Plus subscription fees, the group lifted its medium-term target for adjusted EBITDA margin from between 25% and 26% to between 25% and 27%.

It continues to target growth in adjusted earnings per share at a mid-teens percentage rate.

Chief executive Nickyl Raithatha said: "Moonpig's performance has been underpinned by robust growth in order volumes, powered by our multi-year investments in technology and innovation and the structural market shift to online. Raising our medium-term profit margin target demonstrates our confidence in the outlook for the business.

"We continue to innovate to attract and retain our loyal customers. To date, over 17 million innovative card creativity features have been used to customise our cards, including audio and video messages, AI-generated text suggestions, stickers, flexible photos and digital gifting solutions."

At 1035 GMT, the shares were down 10% at 239.50p.

Dan Coatsworth, investment analyst at AJ Bell, said: "It feels as if Christmas cards have been losing popularity in recent years as people can't be bothered to send things by post unless they're parcels. With the price of a first-class stamp now costing more than many Christmas cards, there are even greater headwinds for greetings card companies like Moonpig. It's having to work hard to keep growing and diversifying into other areas like experiences hasn't gone smoothly.

"A lot of people are still watching their pennies and the higher-priced experiences like getting people to sign up for a day at the racetrack or a spa treatment are hard sells in the current economic environment. Moonpig has had to moderate its growth expectations for this part of its business and that's caused the share price to fall out of bed."