Keeping workforces out of the office for a whole year, and the subsequent reluctance of many employees to return to their offices despite the reopening of many corporate workspaces has taken its toll on companies that lease commercial real estate. IWG PLC, which many people will remember as Regus, is a provider of serviced offices that has been around for 32 years, and remains very much a big name in its field. The number of employees that are under their duvets instead of at their desks is still very high, and IWG PLC has felt the pinch as its office spaces have languished empty for several months and leases are being considered in a very different light these days in that companies which also have to watch their pennies following the lockdowns that have been inflicted on them begin to be less in favor of renting office space that nobody uses.
As a result, IWG, which was renamed from Regus in 2016 as a result of having established a new holding company IWG (International Workplace Group) and announced its intention to move its base outside the European Union referring to the "increasingly complex legislative environment", has issued a profit warning.
Thus, today, IWG's share price has taken a massive nosedive, down from 365p on Friday to a low of 307p on Monday morning once the announcement was made. Shareholder confidence was diminished by the profit warning, with shares in IWG falling more than 15% to 309p in morning trading on Monday. The profit warning, issued this morning by the company, stated that the lockdowns are "expected to have a significant impact on the Group's results for 2021, with underlying Group EBITDA for 2021 now expected to be well below the level in 2020."
IWG recently struck its biggest deal to date with Japanese telecoms group NTT to give its 300,000 employees around the world access to IWG's office network, and during the course of April and May, there has been some return to the offices of staff, but the occupancy has been nowhere near what was expected by IWG.
The company maintains a positive outlook, but considering that office space is its core business activity, it's perhaps not surprising that a profit warning due to lockdown-induced damage has dented confidence.