Shares in Moonpig, the online personalised greetings card and gifts company, fell by almost a fifth on Wednesday after it cut its expectations for annual revenue.
The company endured the largest one-day fall in its short history as a listed company after it blamed the cost of living crisis and the impact of Royal Mail strikes for a £30m hit to sales expectations for the year ending 30 April.
Moonpig, which also has the Red Letter Days experience brand in its stable, said it was now targeting sales of around £320m for the period but maintained its profit outlook.
It explained that customers were buying cheaper gifts as a result of the pressure on incomes from surging inflation.
Moonpig also noted a hit from customer confidence as the continuing Royal Mail dispute threatens further delays to orders – with further strikes due in the run-up to Christmas.
It is the latest firm to bemoan the impact of strike disruption on the retail sector ahead of its most important season.
As Black Friday shopping got under way last month, eBay was among marketplaces to warn that it risked sending small sellers out of business.
Moonpig chief executive Nickyl Raithatha told the Reuters news agency that the company had focused on offering gift ranges at a lower price point of around £10 to £15 in a bid to support customer sales.
Nickyl Raithatha has responded to lower gift spending by offering cheaper products
“They are continuing to buy gifts, but they are trading down on the amount they spend on gifts,” he said.
Shares in the company, which made its market debut in early 2021, have fallen nearly 65% from its flotation price.
They were 19% down on the day at one stage on Wednesday but recovered some of that lost ground in afternoon trading.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said of the update: “Moonpig will have been relying on the festive season to supercharge the top and bottom lines, and operational disruption has resulted in a disappointing downgrade which has sent shares tumbling.
“The real issue here is that these challenges are likely to rear their head again until the ongoing dispute can be ironed out.
“It’s also going to put customers off using the service at all. 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, whose main unique selling points are fast service and convenience.
“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.”
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