The world’s largest consumer gift packaging business, IG Design (IGR:AIM), has enjoyed a ‘good’ start to its new financial year to July 2021 with like-for-like sales up an impressive 25% in the opening four months.
IG Design’s orderbook for the year remains ahead of the prior year, underpinning a full year sales outlook ‘ahead of expectations’.
And yet the shares cheapened 1% to 517p as the company warned it has experienced cost headwinds, especially in terms of sea freight, as well as regional operational disruption due to the ongoing impact of Covid-related supply chain restrictions.
Thanks to a combination of strong sales growth and actions taken across the group to mitigate these cost pressures, earnings to date have been in line with expectations.
WORKING WITH THE WINNERS
For the uninitiated, the company designs and makes everything from gift packaging and greetings cards to stationery and design-led giftware and boasts the likes of Walmart, Amazon, Target, Costco, Lidl and Aldi as customers.
IG Design reported 25% like-for-like growth on the prior year and up 10% on proforma revenues (including the acquired business CSS prior to ownership) for the comparable period in pre-pandemic 2019, reflecting growth across IG Design’s Americas and International divisions.
‘Working with the world’s winning retailers and e-tailers has helped deliver our double-digit revenue growth for the year to date and underpins our strong forward orderbook, as we navigate the ongoing impact of Covid-19 across our supply chain,’ said CEO Paul Fineman.
THE CANACCORD VIEW
Canaccord Genuity is sticking with its ‘buy’ recommendation and 790p target price for IG Design.
The broker believes that ‘the group’s strategies of “working with the winners”, “design & innovation” and “efficiency & scale” leaves it well positioned to deliver attractive and sustained growth in shareholder value in the future, through a combination of organic growth and acquisitions.
‘The recently announced ambitious new Growth Plan, to double revenue and EBITDA through a combination of organic growth and acquisitions, should further support the group’s medium-term growth ambitions.’
