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Senior Analyst comments on Ted Baker trading update

Camilla Rydzek
26 May 2022

In its latest trading update for the full year 2022 and Q1 2023, Ted Baker cites an "improved performance" across all of its channels and markets. Here Freetrade's Senior Analyst, Dan Lane, comments on the company's trading update.

Ted Baker: playing hard to get works

Sycamore might be feeling like a lovesick teen. Three attempts to woo Ted and now it can only watch as the retailer leaves the dance with someone else.

But it’s not the popular kid they’re walking away with, more a rom-com style fixer-upper.

It has been a race to snap up the firm because of what it could offer, not what it looks like now.

And a turnaround is sorely needed. It’s been an eye-popping fall from grace for the retailer over the past few years, long-term shareholders will know that all too well.

But it’s that plummeting valuation that means it could well be the latest in a string of takeovers of UK listed firms.

The good thing is that the internal problems of alleged inappropriate behaviour and a sluggish move to online services either have been, or are being, addressed.

Ted’s still not there and the transformation programme might need fine tuning, especially with shoppers to-ing and fro-ing over whether they want to get back in store or stick to the web.

But that’s what a buyer wants, opportunity. If it was all working like clockwork, the valuation would almost certainly be higher.

Covid’s fading, inflation’s still here

The aggressive promotions and discounts we saw over lockdown are gone but there’s a new challenge in the form of a customer likely to pull in the purse strings.

Ted sits in a kind of ‘premium high street’ category, not luxury but culturally a step up from the likes of Next and River Island.

Its aspirational allure has to contend with a hike in the cost of living now though. And whereas those same shoppers might look for cheaper alternatives, Ted is unlikely to get shoppers trading down from true luxury brands like Burberry. There was a time when they might have but, in the time since Ted has put itself through the reputational wringer, fashion has moved on.

Shoppers are willing to go off-piste and explore online-first options rather than scour the ubiquitous department store concession stands.

The worry is it’ll be caught in no man’s land, with the ASOS and Shein fans sticking to fast fashion and mid-tier brands like Ted watching customers join them.

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