Marks & Spencer and Arcadia tailoring supplier Bagir has issued a profit warning for the full year to December 31 2014 due to an “unexpected reduction” in orders and a drop in margins on retained revenue from its largest customer.
The group, which claims to have a 40% share of the formalwear business at both Arcadia and M&S, said there was “no certainty” that previous order patterns will be sustained. It did not name the customer whose orders had dropped.
Bagir now expects revenues for the year to be approximately $100m to $104m, a shortfall of $15m compared to previous plans. EBITDA to be approximately $4m to $6m.
As a result Bagir has started the process of obtaining a waiver from its debt providers over its banking covenants. The business is looking at ways to reduce material costs and is actively seeking new business, but warned it “cannot be certain” of the future.
Danny Taragan, chief executive of Bagir Group, said: “Clearly the reduction in purchase orders and the reduction in margins on revenue is a major disappointment; however the company plans to take the necessary actions to help mitigate these issues.”
On April 14 Bagir launched on the Alternative Investment Market (Aim) with the intention of using the cash raised to reduce its debt and grow its international business.
Bagir has six offices across the world including one in Kentish Town, north London. Bagir posted a 15% rise in revenues to $99.5m (£59.8m) as EBITDA climbed 83.2% to $6.1m (£3.7m) in the year to December 31, 2013.