Ted Baker profits slump amid extra costs and higher discounting
Ted Baker’s profits slumped last year as the fashion retailer grappled with a scandal which pushed its founder to resign, as well as a competitive retail environment.
Profit before tax was down 26.1% to £50.9m in the 52 weeks to 26 January. Group revenue was 4.4% higher at £617.4m, thanks to growing sales across the UK, Europe and North America.
The results come at the end of a challenging year for the company, which has taken its toll on the balance sheet.
Exceptional items totalling £12.1m included the cost of an external investigation into the conduct of former chief executive and founder Ray Kelvin.
The company was also forced to write off unpaid bills from House of Fraser after the department store went into administration last August, while the acquisition of No Ordinary Shoes added another cost.
With exceptional items stripped out, pre-tax profits fell 14.3% to £63m.
The competitive environment for retailers pushed the brand to use promotional prices to attract customers, putting additional pressure on the group’s gross margin, which fell to 58.3% from 61%.
Executive chairman David Bernstein said: “Performance has been impacted 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 at different points throughout the period.
“Despite this challenging backdrop, Ted Baker continues to develop as a global lifestyle brand reflecting the strength of the brand, the design and quality of our collections and the passion and commitment of our talented teams across the world.”
Bernstein has taken on his executive role to provide additional support to acting chief executive Lindsay Page, who assumed the role following the suspension of Kelvin last year.
Kelvin was accused of enforcing a “hugging” culture at the company. Accusations were also made that he massaged employees, kissed their ears and asked some to sit on his lap. He left the company earlier this month, 32 years after establishing it.
More changes at the top are to come, with Bernstein saying he will not stay on as chairman beyond the end of November 2020, by which time a new non-executive chair will be appointed.