Moonpig doubles profit to £11.2m
The two biggest shareholders in Moonpig, the online card retailer, have shared a dividend of nearly £5m after crafting a 67 per cent jump in the business's annual profits.
The internet specialist, which specialises in cards with personalised pictures and messages, delivered pre-tax profits of £11.2m for the year to April, up from £6.7m the previous financial year.
Founded in 1999, Moonpig has successfully captured the online zeitgeist: its sales last year jumped 50 per cent to £31.3m, as consumers sought a fun, inexpensive and less time-consuming way to send greetings cards than trips to the high street. Nick Jenkins, the retailer's founder and chairman, and Duncan Spence, who is an early investor, will split almost £5m from a total dividend of £7.3m.
The online retailer, which has operations in London and Guernsey, has expanded into flowers and personalised gifts and into the US. Mr Jenkins, a former sugar trader, has said that Moonpig's best-selling cards are spoof magazine covers. He added that US cardbuyers tends to be "less rude" than the British.
Company overview
Nick Jenkins (shown above), 42, founded Moonpig.com in 1999 at the height of the dotcom boom, naming it after a childhood nickname. It is now the UK’s leading online greetings card retailer.
Jenkins, a graduate in Russian literature, moved to Moscow straight from university in 1990, working as a sugar trader. He ended up spending eight years in the country, returning to the UK only after receiving a death threat from a corrupt Siberian client who had embezzled millions of dollars worth of sugar. However, he did not leave empty handed, having made money from participating in the management buyout of his Swiss employer.
Back in the UK, Jenkins studied for an MBA at Cranfield University while working on ideas for his own business. He decided the internet was the key to success and, after working on the business plan for an online personalised greetings cards company during the course, he set up Moonpig.com within two days of graduation. Jenkins was looking for a business that used the internet to create a better product than the High Street, thus avoiding the trap of merely selling the same product at a lower margin. Having often personalised humorous birthday cards for his friends with the aid of Tippex and a marker pen, Jenkins was convinced that by combining the internet and digital printing technology he could make it profitable to allow customers to order a single personalised greeting card. Judging from the past reaction to his own rudimentary efforts he thought the idea would catch on.
He took his business plan to greetings card publisher, Paperlink and asked them if they would be willing to give him the rights to their designs. The company agreed, and on the strength of that deal Jenkins set up Moonpig in 1999, using £160,000 of the money he had made in Russia to rent premises, hire a website-development company and employ a printing specialist.
As well as allowing customers to personalise their cards by changing the captions on standard greeting cards, the company also started creating cards that looked like spoof magazine covers. Customers loved the cards. From the very beginning Jenkins noticed that most of the new customers were coming to Moonpig because they had seen or received a card. It was this viral growth which enabled the business to grow despite having almost no money to spend on marketing.
Jenkins started raising more investment for the business just as the dot.com boom collapsed. It took five years and six rounds of fundraising from private investors for Moonpig to reach profitability, with Jenkins injecting more of his own cash at each round to encourage the other investors.
The business has never looked back and, with more than 2.5 million customers, now accounts for over 90% of the online card market.
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