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Moonpig profits and earnings hit by postal strike and cost of living


As of today, you have just under a week to get all your Christmas cards out if you want them to get delivered before 25th December. That’s notwithstanding any other strikes by Royal Mail [LON:IDS]. But if you didn’t get the time to get down to your local newsagents to pick up a box of charity cards, there’s always Moonpig LON:MOON to fall back on, which incidentally published its half year results for the six-months ended 31st October 2022 today.

The personalised greeting card company is in thrall to the Post Office, as it uses the national carrier to deliver most of its cards, along with Yodel and DPD for packages, and warned that: “Trading at Moonpig and Greetz reflected the more challenging conditions seen from October onward and was also impacted in the UK by industrial action at Royal Mail during September and October, which affected last-minute card-only orders around each strike day.”

Revenue growth

The company reported revenue growth of 115.4% on a three-year basis against pre-Covid comparatives for 1H20, with revenues of GBP142.8m for the six months ending 31st October, against revenues of GBP142.6m for the year previous.

Gross profit came in at GBP77.2m, up 10.5% year-on-year from GBP69.9m for the six months ending 31st October 2021. Adjusted EBITDA was down 1.2% to GBP34.6m, against GBP35m year-on-year and basic earnings per share was 1.7p, compared to 4.5p for the previous period.

The FTSE250-listed company opened trading today (7th December) at 139p and had fallen to 125p within the first two hours of trading. Moonpig was originally listed in February 2021, IPO-ing at 350p and has offered a year-to-date return of -66.8% and a one-year return of -62%. The company has a market capitalisation of GBP517m, and its shares have ranged between 119p and 398p over a 52-week period.

The company sells its products through its proprietary app and online, allowing customers to personalise cards and send a range of gifts. It also owns Red Letter Days and Buyagift brands in the UK and the Greetz brand in the Netherlands. Originally set up in 2000 by Dragon’s Den investor Nick Jenkins during the nuclear winter that followed the bubble bursting, Moonpig was initially funded through private investment and VC.


The company quickly jumped on the telecoms bandwagon, and as phones and digital cameras became more sophisticated developed its products to allow customisation and personalisation. In 2007 the company was responsible for 90% of the greetings card market in the UK.

In today’s announcement, Moonpig warned that it was facing challenging trading conditions, but: “…generally, the greeting cards market has a long track record of recession-resilience.” Nevertheless Moonpig lowered its full-year sales forecast by GBP20m downgrading expectations of GBP350m to GBP320m that it had released earlier in the year. Along with lower first-half profits, and an ongoing cost-of-living crisis, the company was preparing the market for lower expectations, which was reflected in the share price activity following the announcement.

The company’s reported profit before taxation more than halved to GBP9.1m from GBP18.7m in the six months ending 31st October 2021. Net debt was GBP208.8m at the end of October 2022, jumping 515.2% from its pre-Covid net debt position at the end of October 2019, with finance costs of GBP5.8m, up from GBP4.9m the year previously. Financing costs are expected to end the financial year at between GBP14m and GBP15m. Most of the debt was accrued in the company’s acquisition of Experiences, the holding company for Red Letter Days and Buyagift, together with additional leases taken out in respect of new operational facilities at Tamworth in the UK and Almere in the Netherlands. Senior debt facilities are committed until January 2026 with significant covenant headroom.

Christmas is going to be a critical period for Moonpig. However, its shares are seen to be undervalued by analysts at Berenberg which recently reiterated its ‘Buy’ rating, setting a 390p target price in September.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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