 issue a profit warning in their trading update as their sales were lower than anticipated. Share price falls more than 30% as a result.){kind=link}
International Workplace Group (LON:IWG) have issued a profit warning in their trading update today as the anticipated improvement in sales for the third quarter was “weaker than expected”.
The company announced that mature revenues for the first nine months of the year fell 1.9% year on year. IWG have cited weaknesses in London and natural disasters in other parts of the world causing disruption as reasons to why their performance was worse than expected.
The workspace provider also predicted that their operating profit for 2017 will be “materially below market expectations” and that they will range between £160 million and £170 million. Despite this raft of negative news the board “remain positive about the opportunity for the Workplace-as-a-Service market”.
Due to this optimism IWG plan to continue to increase investment in growing their national networks, however this came with further warnings that “in the short-term… this will lead to additional overhead costs and new centre losses due to the timing of openings”.
IWG added that sales in October have been far more positive and that they are also encouraged by a 4.4% growth in revenue for the third quarter across their open centres (excluding closed centres).
IWG PLC was formerly known as Regus and changed their name as they moved their headquarters out of the E.U. The group said the move to Switzerland was due to the “increasingly complex legislative environment” of the E.U.
The serviced and casual office space industry has also become far more competitive, with companies such IWG rivals WeWork continuing to experience growth. This added competition is also likely behind the drop in expected sales seen.
At the time of publication, IWG’s share price has had a dramatic fall by 34% to 210.86p.