- Americas hit by weak seasonal sales
- Some big customers in difficulty
- Other customers delaying orders
It was a dark day for shareholders in celebration products maker IG Design (IGR:AIM) after the firm warned full-year earnings would be ‘significantly below’ current market forecasts due to problems in its Americas division.
The shares lost 86p or more than 60% to 56p, wiping out £80 million of market cap and taking them back to the lows of 2022.
TROUBLE AT T'MALL
The group, which has 11,000 retail customers across nearly 80 countries around the world and sells 1.3 billion products each year, said trading in the third quarter to December had been ‘negatively affected due to challenging retail conditions’.
The most seriously-impacted area of the business was the US, where a number of the firm’s retail customers had experienced ‘considerable distress, and in recent weeks entered protective arrangements or bankruptcy procedures’, culminating in its fourth-largest US customer re-entering Chapter 11.
This has forced IG Design’s Americas subsidiary to put aside ‘significant’ provisions in the region of $15 million to offset its exposure to the amounts receivable from customers as well as the inventory the company is holding on their behalf.
Adding to its woes, a number of other customers in the Americas have reduced or delayed their orders due to weak Christmas sales, impacting the group’s future revenue forecasts, production scheduling and ability to absorb costs.
NEW BROOM
Fortunately, the firm recently appointed a new Americas chief executive, Sue Buchta, who previously ran Wilton Brands, a leading food, paper and textile crafting supplier, who certainly looks to have her work cut out in terms of turning the business around.
‘We’re very pleased to have someone of Sue’s calibre leading our Americas division,’ commented group chief executive Stewart Gilliland.
‘As a passionate and innovative leader, we are confident that her experience both in our industry and adjacent industries will bring further momentum to the transformation of this business.’
Gilliland continued: ‘The 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.’
