Card Factory (CARD) has followed in the footsteps of Moonpig (MOON) by saying it wants more of its future earnings to come from selling gifts and party-related items. This is part of a strategy unveiled by new chief executive Darcy Willson-Rymer who joined in March from Costcutter.
Moonpig has been pushing items such as flowers, plants, personalised mugs, hampers and jewellery as a way of getting customers to spend more money on its platform.
Traditionally known for its physical shops rather than web services, Card Factory saw significant disruption during the pandemic which put pressure on its finances. During that period, online-only rival Moonpig enjoyed a big spike in sales as more people bought cards via the internet for the first time.
Moonpig has brought some relief to investors concerned that it would not be able to sustain robust sales growth by saying that trading had remained strong since May, prompting it to raise sales guidance. However, investment in marketing and technology is likely to have put pressure on profit margins.
Russ Mould, investment director at AJ Bell, says: ‘Moonpig risked seeing a big drop-off in trading as lockdown restrictions eased and people reverted to the old trend of buying cards in the shops. However, it doesn’t seem as if that has happened, at least not yet.’
Card Factory says its online trading is in line with our expectations and in-store footfall and transaction volumes continue to recover, albeit transaction volumes remain 21.9% below pre-pandemic levels.
It says: ‘Average basket value remains higher than pre-pandemic levels, with basket mix reflecting our broader product offering, offsetting lower footfall. Like-for-like trading for the seven weeks to 19 September is -3.6% and -6.3% versus the equivalent period in FY21 and FY20 respectively.’
The update wasn’t enough to win over investors, with Card Factory’s shares falling 1.8% to 58.9p. They are down 14% over the past six months.
Moonpig’s raised sales guidance initially excited the market with the stock up 6% at the market open. However, by 9.45am the shares had lost most of these gains to trade a mere 0.2% higher at 361.2p.