IG Design Group shares halved on Friday after issuing a stark trading update revealing significant challenges in its US market operations through December 2024 and into early 2025.
The company’s American division, DG Americas, has been particularly hard hit by ongoing turmoil in the US retail sector. This week, their fourth-largest customer filed for Chapter 11 bankruptcy protection, prompting IG Design’s DG Americas division to set aside provisions of approximately $15 million to cover potential losses from outstanding receivables and associated inventory.
IG Design Group shares were down 55% at the time of writing.
The situation has been further compounded by disappointing Christmas season sales across their product categories. Multiple retail partners are now scaling back or postponing their forward orders, which is adversely affecting revenue projections, production schedules, and cost management.
In response to these challenges, the company has recently appointed Sue Buchta as the new CEO for DG Americas. Buchta, who brings extensive experience from the consumer products industry, will focus on implementing a comprehensive turnaround strategy aimed at restoring the division to profitable growth.
The company now forecasts overall group revenue for the financial year ending March 2025 to fall approximately 10% below the previous year’s figures. DG Americas is expected to see a significant decline of around 13%, while DG International is projected to contract by approximately 1%.
Investors will be upset with the revision of profit expectations, with the group now anticipating to break even for the full year—a substantial departure from current market expectations of $32.0 million.