Israeli men's fashion manufacturer Bagir Group Ltd. (AIM: BAGR), which went public last April, has lost 84% of its market cap at the time of its IPO, giving it a market cap of $7.7 million, even lower than that of a beginning startup. The Bagir share collapse began in mid-May, a month after the IPO, when the company issued a warning that its largest customer, British store chain Marks & Spencer, had ordered fewer goods than expected. In response, the share lost 68% of its value in a single trading day, reaching a temporary nadir of $0.205. The IPO took place at a $0.56 share price.

The share's plunge did not stop there; things got worse, and the company statement this morning provided a possible explanation. Bagir retained its forecasts of $100-140 million in revenue and $4-6 million EBITDA, but said it expected its results to be at the lower end of these forecasts, which already showed an absence of growth since 2013.

Furthermore, the company revised its actual results for the first half of the year, further evidence of how much trouble it would have meeting its 2014 forecasts. Bagir's revenue will total $48 million in the first half of the year, and its EBITDA will be a mere $1.6 million, while its net loss is expected to be $2 million.

In a rather natural response to this revision, the share dropped 25% this morning, hitting a new low of only $0.09, giving a $7.7 million market cap. The loss leaves open the question how investors will ever make any return on their investment.

Bagir makes tailored suits, mostly for men, and sells them to retail chains, rather than independently. The company's largest shareholders are FIMI Opportunity Funds, controlled by Ishay Davidi, with a 17.4% stake, and Zvika Barinboim's SG Textile, with a 16% holding. The company's net debt is $9 million.

Bagir raised $34 million in its IPO.

Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2014

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