Britons buy more greeting cards per capita than any other nationality. Statisticians even include them as a “staple food” in inflation calculations. Card shops still had to close during the lockdown. The online card and gift retailer Moonpig has benefited from this. Booming sales and profits spurred private equity owners Exponent to advance plans for discussion Tuesday £ 1 billion London Listing.
The national preference for greeting cards has historically not been kind to public investors. A letter from the administrators is all Clinton Cards shareholders received in 2012. Shares in the remaining publicly traded business card factory have lost 90 percent of their value since their peak in 2015. Both suffer from the same malaise the other brick and mortar company hurts retailers. Moonpig’s online business case may stack up, but investors should be wary of a pandemic-induced valuation.
Overall, UK ticket sales have declined by around 1 percent annually. Retailers have been able to maintain sales value by compensating for higher prices. Moonpig says his technology and customer data allow him to sell more profitable gifts alongside cards. Sales of £ 156 million in the six months to October were 135 percent higher than last year. About half came from gift sales, the proportion of which has grown steadily in recent years.
An impressive 80 percent of sales come from returning customers. Ebitda margins of 26 percent are expected to total £ 80 million for a full year, double the previous year’s result. The £ 12bn valuation is shy of the fast-paced technology that several bankers are pushing for. But it’s in line with Card Factory stocks at their 2015 peak.
This seems reasonable provided that sales and earnings growth can be sustained without lockdowns. The permanent shutdown of physical competitors should also help. But Moonpig has managed to capture an additional slice of the UK market thanks to unfortunate but temporary circumstances. Buyers should beware of sellers trying to keep this fact under wraps.
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