Pandemic sends Moonpig’s sales flying but revenue growth forecast to slow

by | Jul 27, 2021

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, discusses Moonpig’s revenue growth, which saw an increase of 113% in the 12 months to the end of April.

“The pandemic sent Moonpig flying in terms of sales, with revenue more than doubling in the twelve months to the end of April. But with plans to spend big on marketing to hang onto newly acquired customers as revenue growth is forecast to slow, shares have fallen by 6% in early trading.

Moonpig had already held a dominant share of the market before the virus hit and the crisis sent it to cloud 9 in terms of brand awareness, as shoppers, confined to home, had little choice but to switch to sending greetings online.

With stores of high street rivals shuttered and supermarkets the only main rivals in lockdown, it’s little surprise Moonpig rooted out a surge in new customers, and its e-commerce platform was geared up to sell plenty more celebratory ranges alongside cards, a product mix which should bode well for future growth. Transactions rose to just shy of 51 million for the year. The surge in new custom beat even expectations surrounding Moonpig’s successful launch onto the London market in February. IPOs are expensive, and those costs have eaten into pre-tax profits which rose by only 3%, to £32.9 million.

The easing of restrictions risks sales at the company coming down to earth with a bump but the stop start nature of the recovery, has kept the sales rolling in for now, albeit at a slower pace. Headline revenue growth of 45 to 50% compared to its financial year to April 2020, would keep the company high on the hog, but a big chunk of those earnings will be used to capture further market share, rather than end up as profits.

Moonpig is on a quest to get even fatter as it attempts to gobble up an even bigger share of the card market in the UK and the Netherlands. Snuffling out those truffles is likely to be much harder and more costly with competition intensifying from high street and online rivals. But it has now acquired a huge data set on customer choices and preferences, which alongside its flexible delivery options and extended creative ranges, such as augmented reality cards, should help it stay ahead of the herd.”

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