TIDMIGR
RNS Number : 6280Z
IG Design Group PLC
26 January 2022
26 January 2022
IG Design Group plc
("Design Group", the "Company" or the "Group")
Trading Update
IG Design Group plc, one of the world's leading designers,
innovators and manufacturers of celebrations, craft, gifting,
stationery and creative play products, today issues a trading
update for the nine months ended 31 December 2021.
The Group has continued to deliver good revenue growth in the
nine-month period to 31 December 2021 with revenue at $828 million,
up 12% like-for-like on the prior year. The Group's focus on
delivering high customer service standards in the run up to
Christmas, despite the challenging macroeconomic supply chain
issues, has helped its customers achieve strong sell through of
their seasonal product ranges and underpins the Company's continued
long term relationships with them.
Nevertheless, the Group experienced further supply chain delays
and headwinds which resulted in a significant volume of seasonal
orders being processed and shipped in a shorter time window than
previously envisaged, thereby incurring fulfilment related cost
premiums. During the same period craft sales in the US fell below
the higher prior year Covid-19 levels, a trend that is now forecast
to continue into the final quarter of the financial year.
As a result, and despite the International business performing
in line with expectations, the US division has incurred significant
supply chain costs, specifically in relation to freight, labour and
raw materials, which alongside the lower craft revenues has
resulted in Group adjusted operating margins in the nine-month
period of 4%, down 460 bps year on year.
This year to date performance, together with the expectation of
the continuation of the cost headwinds and lower craft sales in the
final quarter, means the Group now expects its full year FY22
adjusted operating profit to reduce to a breakeven position,
resulting in full year earnings significantly below current market
expectations.
Based on this updated guidance there will be no final dividend
payment in relation to the current year, however, beyond FY22 the
Group plans to continue paying dividends in line with its existing
policy.
It is expected that these external challenges will continue into
FY23 bringing heightened uncertainty and it therefore remains too
early to give firm guidance on FY23 financial performance. Consumer
demand remains strong and discussions with customers and suppliers
to mitigate the headwinds are progressing. The Board will provide a
further update to the markets in April 2022 as part of the year end
trading update.
In addition to ongoing commercial and operational initiatives to
mitigate margin and supply chain challenges, the Board has taken
the decision to review the priorities and plans in the US to ensure
the business is adopting the best route moving forward. While the
Board believes the Group's overall strategy remains correct, the
review will ensure the business is best placed to return the Group
to the financial performance expected. The Board will provide
further updates to the market in due course.
As at 31 December 2021 the Group was in a net cash position
reflecting normal working capital reduction following the seasonal
peak. Further to the guidance provided above, the current expected
year end net cash position is forecast to be around $40
million.
The Board is making good progress with the replacement CFO
search process and can also announce that Giles Willits has
signalled his intention to extend his notice period with the
business, given the unprecedented macroeconomic challenges.
Paul Fineman, Group CEO, commented:
"To say that I and the whole Board are disappointed with our
financial performance over FY22 to date is a huge understatement.
Without any end to the supply and cost challenges in sight we
cannot simply wait for these external challenges to improve. We
have therefore instigated a review of our US operations, analysing
our cost base and identifying improvements that can be made
quickly. We remain confident in our long term strategy but with the
current challenges unlikely to ease in the short term we plan to
undertake this review to ensure it remains appropriate. We will
update on progress over the next few months."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU No. 596/2014) which is part of UK law by virtue of
the European Union (withdrawal) Act 2018. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
For further information, please contact:
IG Design Group plc Tel: 0152 588
7310
Paul Fineman, Chief Executive Officer
Giles Willits, Chief Financial Officer
Canaccord Genuity Limited (Nominated Adviser Tel: 0207 523
and Broker) 8000
Bobbie Hilliam, NOMAD
Alex Aylen, Sales
Alma PR Tel: 0203 405
0205
Susie Hudson
Sam Modlin
About IG Design Group plc
IG Design Group plc, the largest consumer gift packaging
business in the world, is a designer, innovator and manufacturer of
products that help people celebrate life's special occasions.
Design Group works with more than 11,000 customers in over 80
countries throughout the UK, Europe, Australia and the USA.
Its products are found in over 210,000 retail outlets, including
several of the world's biggest retailers, for example Walmart,
Target, Amazon, Costco, Lidl and Aldi. Its brand, Tom Smith, also
holds the Royal Warrant for the supply of Christmas crackers and
Christmas wrapping paper to the Royal family. Design Group is a
diverse business operating across multiple regions, categories,
seasons and brands.
Its five major product categories are: Celebrations, Gifting,
Craft & creative play, Stationery and 'Not-for-resale'
consumables. It offers customers a full end-to-end service from
design through to distribution, offering both branded and bespoke
products from the value-focused through to the higher-margin ends
of the market.
The Company was admitted to the Alternative Investment Market of
the London Stock Exchange in 1995 under the name 'International
Greetings plc' and rebranded to IG Design Group plc in 2016. For
further information please visit www.thedesigngroup.com.
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END
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January 26, 2022 02:00 ET (07:00 GMT)
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