Moonpig slips into loss after £50m write-down hits experiences division

Online greetings card and gifts retailer Moonpig has reported a half-year pre-tax loss of £33.3m after writing down the value of its Experiences division by more than £50m, underscoring the challenges posed by faltering consumer confidence. In expensive discretionary treatments.

The loss in the six months to October compares with a profit of £18.9m in the same period last year. Moonpig blamed the reversal on a £56.7m impairment charge against its trials arm, which was launched last year and represents nearly 10 per cent of its business.

The delisting comes just two and a half years after Moonpig acquired Buyagift and Red Letter Days for £124m from Otium Capital. While these brands have offered thousands of activities from afternoon tea at Harrods to track days at the Top Gear circuit, Moonpig CEO Nikhil Raithatha acknowledged that convincing consumers to spend £80-£90 on such gifts remains a challenge in Cost sensitive environment.

“This is our smallest sector, and it is bearing the brunt of the macroeconomic headwinds,” Raithatha said. “Consumers are more reluctant to spend on premium-priced discretionary items.”

The market reacted quickly, sending Moonpig shares down 14.6 per cent, or 39p, to 228p. Since its £1.2bn flotation in February 2021 at 350p per share, the stock has lost nearly 44 per cent of its value.

Raithatha confirmed that the expertise department is undergoing a “complete transformation.” Beyond leadership changes and outsourcing of non-core functions, the group will reposition the product mix and offer more affordable options to revitalize the segment. The CEO stresses that this is all that remains on the transformation “to-do list.”

Despite the setback, Moonpig remains confident in its core operations. Group revenues rose 3.8 per cent to £158 million, supported by a 10 per cent year-on-year increase in sales in the core Moonbig brand. This growth helped offset declines in experience and a 4 percent decline at its Netherlands-based subsidiary Greetz. The active customer base across Moonpig and Greetz also grew to 11.7 million, compared to 11.3 million the previous year.

Moonpig’s leadership insists that the market for greeting cards and small value gifts remains resilient even amid rising cost-of-living pressures and rising postage costs. “We have not seen any decline in customer demand for cards,” Raithata said. “Young people continue to buy them, and geographically, demand has remained steady.”

Looking ahead, Moonpig expects to meet full-year revenue guidance and remain on a growth path. It aims to increase revenues by double digits and improve profit margins in the medium term, while building on the enduring appeal of greeting cards and the potential to revitalize its experiential offering.

Analysts at Peel Hunt were similarly upbeat, describing Trials’ performance as “weak” but pointing to the continued strength of the underlying business and operational efficiencies that are underpinning the bottom line. “We still believe in the stock story,” Bill Hunt said, reflecting the feeling that Moonpig’s temporary setback in trials need not dampen its long-term prospects.