The personalised card retailer Moonpig has warned sales will be lower than expected this year as cash-strapped shoppers shifted to lower-priced gifts and Royal Mail postal strikes hit its business.
The British firm said trading conditions had become progressively more challenging in October and November because of “macroeconomic uncertainty” and the run of industrial action by postal workers.
In its half-year results announcement, the card, flowers and gifts retailer said sales had been pushed down in part by “disruption to the UK regulated postal service because of industrial action at Royal Mail during September and October”.
The same proportion of shoppers continued to buy gifts, but they reined in spending by a few pounds on each occasion, sending the value of gift sales down more than 17%.
Moonpig, which trades as Greetz in the Netherlands, expects revenue for the year ending 30 April 2023 to be about £320m, down from its previous forecast of £350m as it said it expected the autumn decline in gift sales to last beyond Christmas and into the spring.
Nickyl Raithatha, the chief executive of Moonpig, said: “We don’t have a crystal ball on the macroeconomic climate, but we are expecting a similar trajectory from November [to April].”
He said the strikes were making customers “hesitant to place an order” but deliveries were unaffected as parcel services are not affected by the strikes.
Its pre-tax profit more than halved to £9.1m for the six months to 31 October and revenue declined 8.1% year on year. That reflected a 13.3% drop in total orders, which it said was partly caused by the strike and partly because it was compared with the previous year’s highs fuelled by Covid restrictions.
Moonpig’s share price fell 12.5% when markets opened on Wednesday after it announced its financial results.
About 115,000 postal workers are part of the way through a series of strikes running up to Christmas in an increasingly bitter dispute between the Communication Workers Union and Royal Mail over pay and conditions.
The industrial action is part of a plethora of strike action affecting railways, schools, firefighters and NHS workers – including nurses.
Sophie Lund-Yates, an analyst at Hargreaves Lansdown, said: “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 … A natural solution would be to seek another distribution partner, but this is a big step. Swapping providers increases operational risk and would be a long, protracted process at the best of times.
“The other disappointing development is that customers are reducing the amount they spend on gifts. These lucrative add-ons are an important pillar for margin growth but the sad truth is that while the cost of living crisis cruises on, people are simply not inclined to throw chocolates and flowers into their virtual baskets.”
Raithatha, said:
“Despite the difficult trading environment, we have delivered a robust set of results and, with our data-led model, we are ideally positioned to capture the significant long-term opportunities in our markets.”
