17th Jan 2025 10:18
(Alliance News) - IG Design Group PLC on Friday issued a warning about its full-year profit outlook, citing "challenging retail conditions," particularly in the US, as weighing on its performance.
Shares in IG Design plunged 59% to 58.00 pence in London on Friday morning following the trading update.
The Bedfordshire, England-based designer and manufacturer of celebration products, including greeting cards, gift wrap, Christmas crackers, gift bags, and partyware, expects revenue for the year to March 31, to fall by around 10% year-on-year, below prior expectations.
IG Design said that as a result, adjusted profit is now expected to be "significantly impacted", with adjusted profit for the full year around "break-even", and "well below" last year, when it was USD25.9 million, as well as being "significantly below" current market expectations, which the company understands are at USD32.0m.
The group also said it will miss its previously stated goal of returning margins to pre-pandemic levels of 4.5% in financial 2025.
IG Design attributed the challenges to weak retail demand during the Christmas season, compounded by several major US retail customers experiencing financial distress.
The company said that a number of customers in its DG Americas division recently entered protective arrangements or bankruptcy procedures, forcing the division to make provisions of around USD15 million for receivables and inventory tied to the affected customers.
Revenue for DG Americas is expected to decline by about 13%, while DG International is forecast to slip by 1%.
IG Design also said it would write down the carrying value of its DG Americas division as part of its full-year results, set to be published in late April.
The board said it is no longer able to provide guidance for years beyond financial 2025 but plans to reintroduce forecasts once the situation stabilises.
Despite ongoing cost-saving initiatives and a focus on simplifying its business, IG Design said these efforts have been "more than offset" by the challenging market environment.
Chair Stewart Gilliland said: "The continuing challenging retail backdrop, especially in the US market has undoubtably impacted the performance, position and confidence of many of our customers - with clear winners and losers emerging.
"Whilst we do work with a significant proportion of the winners, our exposure to some of those finding things more challenging means that we are exposed to changing fortunes in the retail space.
"These developments and their impact on the group are clearly very disappointing, and we will continue to strengthen our business model to better withstand the emerging market reality."
Gilliland added that the company remains "fundamentally robust".
By Eva Castanedo, Alliance News reporter
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