Shares in Moonpig (MOON) were marked up 3.5% to 450p on Thursday as the online greetings cards-to-gifts retailer revealed it enjoyed the strongest ever trading week in its history ahead of Valentine’s Day.

Having stepped up marketing spend to draw in more customers, Moonpig now expects sales for the year to April 2021 will be roughly double the £173 million generated in the previous year, although the web-based personalised cards purveyor also expects order frequency and gift sales growth to slow once lockdown restrictions ease.

BUMPER DEMAND

In an unscheduled trading update, Moonpig said the significant increase in demand seen in the first half of the financial year continued through the third quarter and last week, it saw ‘the strongest ever trading week in the group’s history ahead of Valentine’s Day’.

Lockdown beneficiary Moonpig, which joined the stock market on 2 February at 350p, added that purchase frequency ‘remains unusually elevated due to Covid-19 related restrictions, and we are now also seeing a temporary increase in average order values, as more customers attach gifts to their orders’.

Having further increased marketing activity to accelerate customer acquisition, Moonpig now expects revenue for the year to April 2021 to double to around £346 million.

That growth rate is impressive, although it does actually represent a slowdown on the stellar 135% sales growth rate reported for the six months to October 2020.

COUNTING THE COSTS

Web-based business Moonpig also warned that ‘the higher levels of customer purchase frequency and elevated gift attach rates are both expected to moderate’ as lockdown restrictions ease.

In addition, the company guided towards a flat underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin for the year due to higher marketing, staffing and production costs.

POWERFUL MARKET POSITION

As Shares explains in our in-depth look at the business here, Moonpig boasts a powerful market position with a 60% share of the UK online greetings cards market.

That is four times bigger than the number two player, Funky Pigeon which is owned by WH Smith.

Broker Peel Hunt describes Moonpig as ‘a very impressive, ground-breaking business’, with a strong position in an online market that is growing.

READ MORE ABOUT MOONPIG HERE

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Issue Date: 18 Feb 2021