Moonpig has swung to a loss over the first half of its financial year, as it revealed consumers are opting for cheaper experience gifts like bar vouchers or meal subscriptions.
Shares in the online greeting cards retailer tumbled by more than a tenth on Tuesday morning following the update to investors.
It reported a loss before tax of £33.3 million for the six months to the end of October, compared with a profit of £18.9 million generated a year ago.
Total revenues for the group, which includes Dutch brand Greetz, nonetheless grew 3.8% year-on-year to £158 million.
This was driven by a higher volume of orders for Moonpig, which saw sales jump by a tenth.
It also saw a bigger proportion of spending on customising cards, including audio messages, artificial intelligence (AI)-generated text suggestions, stickers and photos.
But Moonpig said a more challenging economic environment was affecting its experience gifts business, which saw revenues tumble by more than a fifth year-on-year.
The experiences, which range from spa days and helicopter tours to afternoon tea and cinema tickets, are more costly and rely on discretionary spending, which has been squeezed during the cost-of-living crisis, Moonpig said.
Consumers have instead been opting for more affordable experiential gifting options, with the retailer reporting a good response to new casual dining vouchers with brands like Slug and Lettuce and BrewDog.
It also said it had expanded its range of subscription gifts such as with recipe box brands Hello Fresh and Gousto, and historic monuments charity English Heritage.
The group also makes money from selling add-ons like wine, chocolate and flowers when people purchase cards.
Moonpig told investors it has been enhancing its use of AI to personalise the shopping experience – including AI-generated card and gift descriptions, and the launch of AI handwriting this month.
Nickyl Raithatha, Moonpig’s chief executive, said: “Ahead of Christmas, we are excited to have launched ‘Your Personalised Handwriting,’ an AI-driven feature that allows customers to add their own handwriting to our cards.
“This launch is a key step in our road-map of innovative features, leveraging emerging AI technologies to enhance the card-giving experience.”
