Ted Baker profits turn red as shares slump
Ted Baker has slumped to a loss as bosses said heavy discounting across the high street, consumer uncertainty and a poorly received spring/summer collection all contributed to the fall.
Losses for the six months to 11 August came in at £23 million, compared with a £24.5 million pre-tax profit reported a year earlier – although part of the reason involved a major investment to overhaul its struggling Asian businesses.
The results sent shares plunging 29% in early trading on Thursday morning to 658p.
Sales also fell 0.7% to £303.8 million and bosses warned the company would continue to struggle in the second half of the year if market conditions do not improve – pointing out the warm weather in September is already having a negative impact.
The fashion brand also suffered from the troubles of Debenhams and House of Fraser in the UK and Nordstrom and Bloomingdale’s in the US – department stores where Ted Baker had a significant presence. It took a hit of £600,000 from the collapse of House of Fraser alone.
Chairman David Bernstein said: “Trading conditions have been characterised by unprecedented and sustained levels of promotional activity across the sector with, in several cases, distressed discounting from brands and retailers and heightened competition.
“The group’s performance has been impacted by very difficult trading conditions throughout the period, amplified by heightened levels of consumer uncertainty across many of Ted Baker’s global markets.
“The financial results we delivered in the first half were behind our expectations. Trading in the second half has started slowly, not helped by the unseasonably warm weather in September, and this will have an impact on the full-year outcome. If these trends continue, we will achieve a second-half result below that of last year.”
Ted Baker, which has 560 stores and concessions around the world, spent £11.8 million improving its Asian businesses and £3.5 million on its footwear division.
It also announced a new partnership with Next in the UK to develop its childrenswear line, following the administration of Debenhams.
Three new stores were opened in the period – two in Germany and one in the US – and a new partnership was announced to create a joint venture in Japan.
Ted Baker also revealed that its independent inquiry into the behaviour of founder and former chief executive Ray Kelvin has cost £2 million in legal fees and other expenses.
Kelvin was forced to quit the business he founded after staff complained that he acted inappropriately in the workplace, including hugging staff and unwanted touching. He denies any wrongdoing.