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Ted Baker bid under consideration by US private equity house Sycamore Partners

Lauretta Roberts
18 March 2022

Ted Baker is poised for Sycamore Partners to make a cash bid after the US private equity house revealed it was in the early stages of making an offer. 

Sycamore has said that it has until 15 April to make a firm bid for the British fashion and lifestyle brand but that there was no certainty an offer would be made.

Ted Baker, which is in the midst of a transformation programme under CEO Rachel Osborne, said it had noted the announcement and that it had not yet received an approach.

"Ted Baker continues to make good progress with its transformation and the Company is emerging from Covid as a stronger and more financially sustainable business. The Board is confident in the Company's independent prospects and would evaluate any offer for the Company against the strong shareholder value creation that it believes can be delivered as a standalone company," a statement to the London Stock Exchange read.

Shares in Ted Baker jumped by almost 17% on early trading this morning to 115.3p on the back of the announcements but Ted Baker urged shareholders not to take any action the back of the news, adding in its statement: "There can be no certainty that any firm offer for the Company will be made nor as to the terms on which any firm offer might be made."

The British retailer is in growth mode post-pandemic having recently signed a new UK franchise agreement with Aldrich Group, which will see it open a minimum of 30 stores over the next 10 years, and unveiled a new digital platform with BigCommerce designed to power global growth. The business currently has 377 stores and concessions worldwide, comprising 97 in the UK, 81 in Europe, 95 in North America, 95 in the Middle East, Africa and Asia, and 9 in Australasia.

Ted Baker achieved strong sales in Q4 despite the surge in Omicron cases that was sweeping across the UK at the time. In the 12 week period from 7 November 2021 to 29 January 2022, it posted group sales growth of 35% compared to Q4 FY2021, which was also up 18% on Q3. It said the global supply chain problems had only a minimal impact on its business and that customers had responded positively to its new collections.

Sycamore is a specialist retail investor with businesses in its current portfolio including Express, Loft Ann Taylor and Lane Bryant. It has previously invested in names such as Stuart Weitzman, Nine West and Kurt Geiger. This week it has also been linked with a possible bid for US retailer Kohl's.

Its interest in Ted Baker comes as the British retailer recovers from a tumultuous few years following the exit of its founder and then CEO Ray Kelvin in 2019, following claims of staff harassment, which Kelvin denied. A series of profit warnings ensued and in 2020 it cut 25% of its UK workforce and raised £100m through a share sale to shore up the business during the Covid pandemic.

Under Osborne – who joined the business from Debenhams in 2019 initially as CFO and shortly after was promoted to succeed Kelvin as CEO – the business has been stabilised and looks set for continued strong growth as it returns to its premium positioning, focusing on full-price sales, and pursues a "capital light" growth plan, such as its latest UK franchise agreement.

When announcing its Q4 trading update, Osborne told the market: "We now have a much deeper understanding of our customers and our brand, including what they love about Ted Baker and where they see room for improvement. Building on this, we have been working hard to re-energise our product and our brand."

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