Ted Baker sales hit as locked-down consumers shift away from suits

The shift to comfortable clothes, rather than formal suits and shirts, during the pandemic has hit sales hard at premium fashion and lifestyle brand Ted Baker.

Ted Baker said revenue dived more than 44% to £352 million in the year to the end of January 2020. Pre-tax loss increased by 39% to nearly £108m.

However the forced closure of stores led to a 22% rise in online sales, to £145m. However its product mix meant it was unable to capitalise on the boom in e-commerce as much as other fashion brands. Wholesale sales were down 50.3% to £85.3m.

Ted Baker's focus on suits and other more formal clothing was “adversely affected by the increase in working from home” during the pandemic, it said, as demand for these products dried up.

There is evidence of this shift in the difference between its menswear and womenswear sales. Men’s clothing sales dipped by more than 50%, while women bought nearly 41% less clothing.

“Demand for more formal styles and occasionwear were particularly affected by lockdown, and these represent a greater proportion of the menswear range,” the company said.

CEO Rachel Osborne said: “While the impact of Covid-19 is clear in our results and has amplified some of the legacy issues impacting the business, Ted Baker has responded proactively and is in a much stronger place than it was a year ago.

“During the period, we delivered robust cashflow generation, fixed our balance sheet, refreshed our senior leadership team and today we are upgrading our financial targets for the second time since outlining our new strategy last summer.

"Additionally, we have made good progress with our sustainability strategy, Fashioning a Better Future, including the mapping of all of our factory partners within our supply chain and significantly increasing our usage of cotton from sustainable sources to 69%.

"We are a year into Ted Baker's transformation plan and continue to believe that we have the right strategy and team in place to set the business up for a stronger, more sustainable future."

The business said its joint venture in China has performed well in its first full year of operation. The Chinese business grew 6% despite shops having to close in the first three months of the year. It grew by 262% in the first quarter of the current financial year, which stretches between late January and late April 2021.

Q1 FY22 trading at the group has continued to be materially impacted by ongoing Covid restrictions, with lockdowns in place in the UK, Europe and Canada for parts of this period.

Group revenue down 19.9% (down 17.3% in constant currency) while e-commerce is up 4.5% (up 25.9% vs. Q1 FY20), as the Group starts to take a less heavy promotional stance compared to the prior year.

Retail stores have been down 40.7% (down 73.1% vs. Q1 FY20). Globally, the group lost 10 more trading days during the period than the prior year, with 53 days of trading during Q1 FY21 and 83 in Q1 FY20. 

However the company said it had been "encouraged with how our UK stores have performed since reopening on 12 April, albeit that revenue remains below FY20 levels".

But city centre and travel retail locations, which accounted for 36% of pre-Covid global store revenues, remain materially below FY20 trading levels as consumers continue to work from home.

Wholesale and Licence were down 22.4% (down 48.3% vs. Q1 FY20) "reflecting cautious ordering from store-based trustees", as well as continued restrictions on store openings in Europe.