Mar 21, 2019
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Ted Baker profits plunge, comp sales drop, but e-tail is strong

Mar 21, 2019

Ted Baker reported lower profits on Thursday, despite its revenue rising in the year to January 26. It did a passable job of navigating some of the toughest times UK fashion retail has ever faced, notwithstanding those lower profits, but there’s no getting away from the fact that lower like-for-like sales and profits sharply down aren’t good news for the once high-performer. But the company still called out a “resilient performance against very difficult trading conditions”.

Ted Baker

So let's look at the numbers. Group revenue in the 12 months rose 4.4% to £617.4m, and was up at 5% on a currency neutral basis. Profit before tax and exceptional items fell 14.3% to £63m and pre-tax profits fell 26.1% to £50.9m.

Overall retail sales fell by 4.2% and the group gross margin was down from 61% at 58.3%. Retail sales in the UK and Europe rose 4.6% to £315m, or 4.5% currency neutral, while North American retail sales were up 4.7% to £125.7m, although on a currency neutral basis they were up a much healthier 7%. But the picture for the rest of the world (RoW) region wasn't so pretty with retail sales down 4.7% at £20.3m, or 2.9% currency neutral. Sales per square foot excluding e-tail were down 5.5%, or 4.9% currency neutral, so no good news on like-for-likes either.

But it continued to open stores, despite the lower sales in its physical spaces. It opened two full-price locations in the UK, five in the US, one in Spain and one in China, plus one UK outlet store, its first outlet in Italy, two in Germany and one in France, as well as department store concessions in the UK and Europe.

The company continued to power ahead with its e-commerce operations as sales there rose 20.4% to £121.7m, and wholesale turnover rose 4.8% to £156.5m with a 5.7% rise currency neutral. License income was up 3.1% to £22.1m.


Having digested the headline figures, what exactly was behind the significant profits fall? Profits were affected by impairment of retail assets globally, money owed by (and unrecoverable from) House of Fraser, costs linked to its CEO investigation and the cost of buying the No Ordinary Shoes footwear operation.

But they were also affected by discounting due to consumer caution and weather patterns. The company said its performance was hit by the “very difficult trading conditions throughout the year including competitive discounting across the retail sector, consumer uncertainty, the well-publicised challenges facing some of our UK trading partners and the unseasonable weather across our global markets.”

Ted Baker

Yet Ted Baker insisted that “the retail channel performed well” and said “our flexible business model, including a relatively low number of own stores that showcase the brand and our e-commerce business enable us to adapt to structural changes in the retail sector.”

On the subject of Brexit, it added: “We have developed a number of strategies and contingency plans which will assist in minimising disruption” but “a number of indirect risks remain which are beyond our control.”


Brexit aside, it’s ploughing ahead with its expansion plans. It will open its first full price stores in Antwerp and Hamburg and an outlet in Metzingen, along with two further concessions in Germany. It will continue to invest in e-tail with a Spanish website due in late May.

In North America it will open a store in Detroit and two concessions, along with two more licence partner concessions in Mexico.

And in RoW, it will “refine and define our strategy.” It plans to open an outlet in Hong Kong and is working towards further growth in wholesale too.

Yet despite all this, it said trading continues to be impacted by “ongoing consumer uncertainty and an elevated level of promotional activity across many of our global markets.” Weather is still wreaking havoc too. It’s clear Ted Baker won’t have an easy time of it this year.

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