Moonpig Group has revealed a jump in sales as it upped the prices of its greetings cards, but said consumers were buying fewer cards and sending cheaper gifts.
The online greetings cards and gifts giant saw its profits decline as it notched up higher costs.
It reported a 5.2 per cent increase in its group revenue in the year to the end of April, compared to the previous year, to £320.1 million from £304.3 million.
It came as the average order value, across its UK website and Netherland’s brand Greetz, jumped from £7.70 to £8.20, which reflects an increase in card prices and fewer promotional discounts, the company said.
The vast majority of sales come from existing rather than new customers, the platform said.
But average selling prices for gifts, like flowers, chocolate, wine and champagne, declined during the year as consumers opted to send cheaper gifts to loved ones amid cost pressures.
Furthermore, order numbers across the online cards brands fell by nearly 15 per cent , which Moonpig said was partly driven by the economic downturn from October following the volatile mini-budget.
It also reflected Royal Mail strikes impacting trading in the lead up to Christmas, with postal workers walking out up and down the country.
Moonpig saw its reported pre-tax profit decline by 12.6 per cent , from £40 million to £34.9 million over the year.
The firm said this was because of higher costs, as it acquired an experiences arm and invested more in technology, and being impacted by higher interest rates.
Revenues in the first half of its new financial year will grow at a low single-digit percentage rate, “in the context of the current macroeconomic environment”, Moonpig said.
Chief executive Nickyl Raithatha said: “We are innovating to differentiate and elevate Moonpig cards with embedded video messages, personalised content and the ability to include a gift experience within the card.
“As the clear online leader in greetings cards, Moonpig Group is well positioned to benefit from the long-term structural market shift to online.”
AJ Bell investment director Russ Mould commented that “Moonpig has tried to style itself as a technology company in the past. However, things like using data to predict customer purchasing patterns, tailoring its offering accordingly and prompting customers with reminders are just what consumer-facing businesses should be doing as a matter of course in the 2020s.
“Moonpig seems to be good at what it does, reflected in its market leadership status. This is not a bad market to be in either, as despite a difficult economic backdrop, most people still like to send a card to mark a milestone. That resilience is reflected in its latest set of full-year results which showed some modest growth and reasonably robust margins and cash flow.
“Where Moonpig could find things more difficult is selling extra little gifts alongside its cards at the checkout stage. If households are really watching their pennies, they may decide they can do without a box of chocolates or soft toy on top.
“Moonpig has proved up the idiom ‘when pigs fly’ by singularly failing to get off the ground since its 2021 IPO. To turn things around it needs to reduce its debt and demonstrate it can deliver growth in a difficult market.”
“The idea of offering gift experiences within a card looks like a smart innovation which may appeal to the time-poor trying to stay on top of friends’ and families’ birthdays and other special occasions.
Press Association – Anna Wise