Ted Baker gets premium price for HQ, says e-tail jumps as stores close
Ted Baker said Monday that stores accounting for 68% of its annual retail sales are now closed. But while that’s undeniably bad news, it also had something good to report with its e-commerce sales rising strongly.
And crucially for its cash flow situation (something that’s hugely important in current circumstances) the company said its plan to sell and rent back its HQ to raise much-needed cash has resulted in a £78.75 million deal. This represents a premium of nearly 40% to the last published book value of the property in January last year.
The head office on St Pancras Way in London is known as The Ugly Brown Building.
The company plans to use the net proceeds (around £72 million) from the sale to a subsidiary of British Airways Pension Trustees Limited “to repay existing indebtedness to significantly de-lever the group”. The transaction should complete in June, and although it still needs shareholder approval, founder Ray Kelvin is supporting it. He owns nearly 35% of the firm’s share capital.
The company has already entered into a short-term lease of the property for a period following completion, and at completion will enter into an option with the purchaser to take a long-term lease of part of the adjacent newly-developed property, to be known as Bowline, Tribeca, St Pancras Way.
The company also said that its lending bank syndicate remains supportive and has agreed to increase the headroom under its facilities by £13.5 million until December 18.
The company added that it’s working hard to protect cash flow and welcomed the 12-month UK business rates suspension as it paid £6.2 million in such property taxes last year.
Supply chain and retail sales
It said it has seen minimal disruption to its supply chain, “with the significant majority of its factories in China now operational. The group does not currently envisage supply disruptions and inventory levels are sufficient”.
But, as mentioned above, with 384 out of its 416 stores globally now closed, the locations through which it generated 68% of its retail sales last year are shuttered.
Ted Baker's e-commerce channel has proved much more resilient and the performance in the first eight weeks of its financial year has been up 16% on last year, “albeit with some variability across recent weeks”.
The e-commerce service continues to operate for customers as normal, “and is a channel the group will be intensively managing during this period of store closures,” it said.
The company also said it's too early to give firm guidance for the current financial year but it will update investors when it delivers its results in May.
Acting CEO Rachel Osborne said: “The sale and leaseback of the Ugly Brown Building and future relocation of our head office are significant developments resulting from the broad asset review we have undertaken in recent months. This transaction and the agreed additional financing provides further headroom and flexibility, which will support the delivery of our transformation strategy.”
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