The group’s share price more than halved on the update, collapsing by 55% and descending to a new 52-week low of 115p in early trading. The 52-week high is 625p.
It’s the firm’s second profit warning in three months, after the business issued a previous warning in October because of the supply chain crisis.
The Newport Pagnell-headquartered producer of stationery, wrapping paper, Christmas crackers, gift bags, partyware and crafting materials said that sales in the nine months to 31 December were up 12% on a like-for-like basis.
However, 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”.
Sales to the crafting market in the US also fell below the higher levels achieved in the prior year when customers’ normal out-of-home activities were curtailed due to Covid-19.
IG said that it expected the cost headwinds and lower craft sales to continue in the final quarter, with the result that full year FY22 adjusted operating profit will reduce to a breakeven position, “resulting in full year earnings significantly below current market expectations”.
Group CEO Paul Fineman 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.”
IG Design Group is searching for a new CFO, but incumbent Giles Willits could extend his notice period to help out, “given the unprecedented macroeconomic challenges”.
The firm also said that it expected the external challenges and resulting uncertainties to continue into FY23, so it was 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,” it said in the trading update.
IG Design Group had sales of $873.2m (£646m) in the 2020-21 year, having switched to reporting in US dollars after the acquisition of CSS Industries in March 2020.
