The gifting, stationery, crafting and creative play specialist posted sales up 11% at $965.1m (£787.89m) in the year to 31 March.
Pre-tax profits fell from $14.7m to $2.2m, while the adjusted pre-tax loss was $1.3m compared with a $32.8m profit the prior year.
IG Design Group said that “a challenging year” – which involved two profit warnings and the abrupt departure of CEO Paul Fineman – “saw margins and earnings significantly reduced by unprecedented supply chain cost increases and freight availability”.
“The priority of the group is a recovery in its financial performance with particular focus on DG Americas, with a change in leadership, this work is already underway and progress made to date,” IG stated.
Its share price rose by 20.75% to 82.11p following the results announcement this morning (28 June).
Interim executive chairman Stewart Gilliland said the impact of cost inflation and supply chain challenges it had experience “have given us cause to re-examine our business, and we are therefore laying out today a foundation for a strategy with a clear focus on restoring profitable and sustainable growth”.
He said there were many elements of the business that gave him confidence.
“We have a wonderful team, substantial scale, very strong customer relationships, and have recently secured an extension to our banking facilities, all of which gives us the flexibility to implement the changes we need to make to move forward. Most importantly, our management team truly believe in Design Group's ongoing potential, and we are committed to working together to execute our strategic initiatives.”
Highlights included its UK business winning Tesco’s Supplier Partner Award for Sustainability for the supply of its Eco Nature sustainable, recyclable and plastic-free product range, with selected lines rolled out in 750 stores nationwide following a successful trial.
IG also brought to market wrapping paper without the usual plastic shrink wrap, eliminating plastic waste through the use of recyclable paper labels instead. Customer Sainsbury’s used only shrink-free gift wrap ranges for Christmas 2021.
Its UK operations are located in Hengoed South Wales, Newport Pagnell and Stapleford. It also has a showroom in Stockport.
The report also stated that the directors had paid “particularly close attention to their assessment of going concern”, and had modelled a number of worst-case scenarios.
The firm ended the year with a net cash balance of $30.2m compared with $76.5m the prior year, with the decrease due to reduced EBITDA contribution and an increase in working capital outflow.
“The analysis demonstrated that the group has sufficient excess headroom for the group to meet its obligations as they fall due for a forecast period of more than twelve months beyond the date of signing these accounts and will also be compliant with all covenants within this time frame and beyond,” the firm stated.
Regarding the outlook, IG said it had a strong orderbook for this financial year, already at 71% of budget.
“The cost environment remains challenging but where possible cost inflation is being passed through in pricing for customers,” the group noted, and it expects to achieve a slight improvement in operating margins.
The search for a new CEO continues.
