Moonpig says Britons buying cheaper gifts as retailer cuts revenue outlook

Moonpig and THG (The Hut Group) logos are seen on laptop in front of displayed stock graph in this illustration taken, January 12, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
  • Cuts annual revenue outlook
  • Shares down in early trade by as much as 19% to 122p
  • Reports more than 50% drop in H1 profit

Dec 7 (Reuters) - Britons are buying cheaper gifts for loved ones amid a cost-of-living crunch, Moonpig (MOONM.L) said on Wednesday, as the British greeting cards and gift retailer cut its annual revenue forecast, sending its shares as much as 19% lower.

Soaring inflation, driven by the rising costs of everything from food to fuel, has forced consumers to tighten their belts and staff from several industries to strike during the busy holiday period as they demand pay hikes.

Nationwide strikes by over 115,000 Royal Mail workers had hit orders in September and October, said Moonpig, which uses the postal company's delivery services for cards and gifts.

More strike actions are planned at Royal Mail in the run-up to Christmas, and Moonpig has warned of lower than expected annual revenue due to disruptions and delays to First Class card deliveries.

Chief Executive Nickyl Raithatha told Reuters that Moonpig in the past few months has focused on offering gift ranges at a lower price point of around 10 to 15 pounds.

"They are continuing to buy gifts, but they are trading down on the amount they spend on gifts," Raithatha said.

Shares in the company, which made its market debut in early 2021, have fallen nearly 65% from its IPO price of 350 pence a share and were trading at 125p at 1003 GMT.

"If you can’t guarantee your card will make it in time, there’s little motivation to pay the premium charged by online card-sellers, whose main unique selling points are fast service and convenience," Hargreaves analyst Sophie Lund-Yates said.

The company, which offers both online greeting cards as well as personalised physical greeting cards, expects revenue for the year ending April 30 to be around 320 million pounds ($388 million), down from its previous forecast of 350 million pounds.

Moonpig's pretax profit more than halved to 9.1 million pounds for the six months ended Oct. 31.

Moonpig, which bought Red Letter Days and Buyagift brands earlier this year, has increased prices and expanded ranges of its higher-margin greeting cards to bolster profitability.

It kept its annual core profit outlook unchanged.

Raithatha said Moonpig uses different delivery providers such as DPD and Yodel for balloons, flowers and plants, whose service remains unaffected by strike actions. ($1 = 0.8253 pounds)

Reporting by Amna Karimi in Bengaluru; Editing by Savio D'Souza and Elaine Hardcastle

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