Christmas rolling out to plan
International Greetings' (L:INGR) pre-close update confirms that trading is as expected in the run up to the key Christmas sell-through period. With a ‘solid’ order book and good progress in new and key accounts in the US, momentum is well established to drive the top line, despite dull underlying markets. Further investment in manufacturing efficiency is delivering the anticipated returns and gives a clear differentiator for retailers concerned with supply-chain compliance. The share price is recognising some of the achievement to date, but not necessarily the ongoing opportunities.
US ahead of historic trends
With the new US CEO, Gideon Schlessinger appointed in April, the business has started to regain lost momentum. New accounts have been won and other accounts extended, including Aldi, a long-standing existing customer within Europe. The August update pointed to a large drugstore chain (7,500 stores) placing an order for Christmas product and creative play product going into a chain of 8,000 discount stores. Investment is going ahead with upgrading manufacturing facilities, initially in new high-speed gift wrap converting. Payback on previous capital projects in China and in Europe has been greater and quicker than anticipated. The strong licensed portfolio (including high-profile Disney (N:DIS) properties) provides a further key differentiator, with National Geographic-licensed product rolling out in the US, Star Wars across multiple territories and in several product categories, Coca-Cola (N:KO) Santa Claus in the UK and the continuing success of Minions driving revenues.
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