Shares in IG Design (LON:IGR) rallied to a 52-week high after the celebrations-to-craft products maker delivered forecast-beating FY26 results. Following a balance sheet reorganisation and another strong period of cash generation, the company reinstated the dividend with a 1p final payout.
In a further show of confidence, IG Design launched a buyback of up to 10% of its share capital. There was also relief as the Newport Pagnell-based firm left FY27 guidance unchanged despite cost pressures and a challenging consumer backdrop.
Turnaround traction
AIM-traded IG Design’s turnaround strategy has traction. As flagged in April, the year to March 2026 ended strongly with further upgrades to revenue, profit and cash expectations.
Continuing revenues at the greetings cards-to-gift bags group declined by 3% to £217.9 million in FY26. This reflected headwinds from softer UK demand, US tariffs and pricing pressure across Europe.
However, these challenges were partially offset by strategic initiatives and favourable currency moves. Adjusted pre-tax profit declined by 42% to £8.6 million. But for FY27, Canaccord Genuity forecasts a 9% rise in adjusted pre-tax profit to £9.4 million on a 2% revenue increase to £221.3 million.
Cash in the coffers
Encouragingly, IG Design ended FY26 with better-than-expected net cash of £54.6 million. The cash performance in the continuing business improved materially last year.
Interim executive chairman Stewart Gilliland commented: ‘With Gerald Kuehr, our new CEO, settling in well, we look forward to working closely with him as we execute our strategy and build on the strong foundations in place.
‘With a stronger balance sheet, a more focused operating model and renewed leadership, we are entering the next phase with confidence. The group is well positioned to build on this progress and deliver sustainable improvement in profitability, cash generation and shareholder value over the medium term.’
It is still early days in the turnaround, but IG Design looks an interesting recovery situation. Following the disposal of the loss-making DG Americas, new broom Kuehr inherits a simpler, stronger business with improving cash generation and earnings quality.
The company is making strategic progress across its four pillars. IG Design is expanding into higher price point and licensed products whilst diversifying into adjacent categories such as décor, wall art and books. At the same time, it is strengthening its ties with wining retailers and enhancing its commercial capabilities.
The reintroduction of a progressive dividend and the share buyback show confidence in the group’s future cash generation. And while IG Design is prioritising organic growth, it is also scouting for selective M&A deals such as the recent complementary bolt-on acquisition of South African cracker manufacturer Glenart.
Read the press release here: https://www.thedesigngroup.com/reports-presentations/
