Moonpig (MOON.L) fell out of favour with investors on Wednesday, slumping as much as 7% on the day, after it revealed a post-lockdown fall in trading.
The online greetings card company saw revenues slump 17.3% to £304m ($370m) in the year to the end of April as shoppers shifted to physical stores once they reopened after COVID restrictions eased.
However, the decline was smaller than expected, with the firm adding that it has been able to acquire new customers at a faster rate than before the start of the pandemic.
Adjusted earnings were down by 19% compared to the year before, while pre-tax profits were 31% lower at £51.5m in its first full year as a listed company.
Moonpig’s share price is down around 38% this year so far, and 45% lower than its initial public offering (IPO) price, having floated on the London stock market in February 2021.
“Moonpig’s results failed to win over the market despite its confidence in raising profit margins thanks to the acquisition of Buyagift,” Russ Mould, investment director at AJ Bell, said.
Despite the fall, Moonpig still issued a bullish outlook on Wednesday, with its acquisition of Buyagift expected to increase revenue to about £350m.
It acquired the company for £124m in cash and is on track to complete this by the end of July.
Nickyl Raithatha, chief executive, said “Our first full year as a listed company has been another transformational period for Moonpig Group – financially, operationally and strategically.
“We have significantly outperformed the targets set out at IPO, and recently announced the proposed acquisition of Buyagift, which will accelerate our journey to becoming the ultimate gifting companion.”
He added: “Our gifting business has grown by over 100% in the past two years, and we are able to adapt with speed and agility to any changing consumer behaviours.
“We remain confident in the outlook for the current year, with our loyal customers continuing to rely on Moonpig to connect with loved ones at moments that matter. The long-term opportunity remains vast and we have never been in a better position to capture it.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said: “Although it’s hard to see how conditions can ever exceed lockdowns for an online-only company like Moonpig, the group has been peddling hard and its efforts in optimising data to target customers through personalised reminders do seem to be paying off to some extent.
The rapid pandemic growth spurt may be behind it, but it’s growing its online market share and with 87% of revenue from existing customers, that loyalty will help Moonpig bring home some bacon, while it invests to try and attract new business."
Watch: How does inflation affect interest rates?