hares in Moonpig have dived after the business said it is prioritising sales of greeting cards as it seeks safer revenues during tough economic conditions.
Investors were worried, despite the business saying it was performing “in line with our expectations” and reiterating guidance for the full year.
The markets focused on one line which showed that Moonpig is favouring greeting cards. Add-on purchases like small gifts and chocolates had been seen as a good way to grow beyond cards.
“In the current economic environment, we have prioritised greeting card sales, which have a demonstrable track record of being resilient across the cycle, and we intend to continue this focus for the remainder of the 2023 financial year,” Moonpig said.
“The decision to prioritise cards over other product ranges also seems to have knocked investor confidence, given that add-on purchases and expanded product ranges were considered to be big drivers for growth,” said Susannah Streeter, an analyst at Hargreaves Lansdown.
“But it seems Moonpig is battening down the hatches and focusing on its more resilient lines to try and cope with the clouded outlook ahead.”
Shares fell more than 10% after the news.
AJ Bell investment director Russ Mould said: “While it is sticking with existing guidance for now, news it is retrenching to focus on card sales – rather than the little extras like chocolates and gifts which provide useful ancillary revenue – and a return to the seasonality seen pre-Covid aren’t messages engineered to enthuse shareholders.”
The business said it expects between 58% and 60% of its revenue to come in the second half of the financial year.
But Ms Streeter said this could be “wishful thinking” after months of lower sales.
“Many more shoppers are expected to tighten their purse strings over the coming months and search for bargains as household bills mount,” she said.
“Scouting for cheaper cards and gifts are likely to be a priority for many people, rather than splashing the cash on personalised items.”
Moonpig said the average value of an order has increased year-on-year.
Chief executive Nickyl Raithatha said: “Moonpig Group’s trading remains resilient and we are confident that full year revenue will be approximately double the level achieved three years ago.
“Against the current macroeconomic backdrop, our continued performance reflects the strength of our data-led business model and the long term opportunities in our markets.”