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

Moonpig, the online greetings card and gifting retailer, has reported a half-year pre-tax loss of £33.3 million after writing down the value of its “experiences” division by more than £50 million, underscoring the challenges posed by faltering consumer confidence in higher-priced discretionary treats.

The loss for the six months to October compares with a £18.9 million profit in the same period last year. Moonpig blamed the reversal on a £56.7 million impairment taken against its experiences arm, which launched last year and accounts for roughly 10 per cent of its business.

The write-down comes just two and a half years after Moonpig acquired Buyagift and Red Letter Days for £124 million from Otium Capital. While these brands offered thousands of activities from afternoon tea at Harrods to track days at the Top Gear circuit, Moonpig’s chief executive Nickyl Raithatha acknowledged that persuading consumers to spend £80 to £90 on such gifts remains tough in a cost-sensitive environment.

“This is our smallest segment, and it’s bearing the brunt of the macroeconomic headwinds,” said Raithatha. “Consumers are more hesitant to splurge on premium-priced discretionary items.”

The market reacted swiftly, sending Moonpig’s shares down 14.6 per cent, or 39p, to 228½p. Since its £1.2 billion flotation in February 2021 at 350p per share, the stock has lost nearly 44 per cent of its value.

Raithatha emphasised that the experiences division is undergoing a “full transformation.” Beyond leadership changes and outsourcing non-core tasks, the group will reposition the product mix and introduce more affordable options to reinvigorate the segment. The chief executive maintains that this is all that remains on the turnaround “to-do list.”

Despite the setback, Moonpig remains confident about its core operations. Group revenue rose 3.8 per cent to £158 million, buoyed by a 10 per cent annual increase in sales at the core Moonpig brand. This growth helped offset the downturn in experiences and a 4 per cent decline at its Netherlands-based subsidiary, Greetz. The active customer base across Moonpig and Greetz also grew to 11.7 million, up from 11.3 million a year earlier.

Moonpig’s leadership insists the market for greeting cards and small-value gifts remains resilient even amid mounting cost-of-living pressures and rising postage costs. “We’ve seen no dent in customer demand for cards,” Raithatha said. “Younger people continue to buy them, and geographically, demand has held steady.”

Looking ahead, Moonpig expects to meet full-year revenue guidance and remain on a growth trajectory. It is targeting double-digit revenue increases and improved profit margins over the medium term, banking on the enduring appeal of greeting cards and the potential to re-energise its experiences offering.

Analysts at Peel Hunt were similarly optimistic, describing the experiences performance as “weak” but noting the core business’s ongoing strength and operational efficiencies that are bolstering the bottom line. “We continue to believe in the equity story,” Peel Hunt said, reflecting a sentiment that Moonpig’s temporary setback in experiences need not define its longer-term prospects.

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