Portfolio

Ted Baker profits drop after 'difficult' year, results in line

By Michele Maatouk

Date: Thursday 21 Mar 2019

Ted Baker profits drop after 'difficult' year, results in line

(Sharecast News) - Fashion brand Ted Baker reported a 26.1% drop in annual profit on Thursday following a "difficult" year in which it was hit by a "forced hugging" scandal that culminated in the resignation of founder and boss Ray Kelvin.
In the year to 26 January 2019, pre-tax profit slumped to £50.9m from £68.8m the year before, even as revenue edged up 4.4% to £617.4m. Profit before tax and exceptional items was in line with what the company guided to last month at £63m, down 14.3%.

Retail sales including e-commerce were up 4.2% to £461m, while UK and Europe retail sales rose 4.6% to £315m. Sales in North America increased 4.7% to £125.7m and sales in the rest of the world were down 4.7% at £20.3m.

The company recommended a final dividend of 40.7p a share, down from 43.5p in 2018 and taking the total dividend to 58.6p a share, 2.5% lower than the previous year.

The group said its performance was hit 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 its UK trading partners and unseasonable weather across its global markets at different points throughout the period.

Acting chief executive officer Lindsay Page said: "Ted Baker has continued to grow across each of the brand's distribution channels despite difficult trading conditions across a number of the group's global markets. This resilient sales performance again reflects the strength of the brand, the talent of our teams, and the quality of our collections.

"I would like to take this opportunity to thank each of my colleagues for their outstanding enthusiasm, skill and commitment and our global partners for their support throughout the year.

"We have made a number of significant investments to ensure that Ted Baker remains well positioned for long term development. We are excited by our Spring/Summer collections and the board remains focussed on identifying opportunities in the evolving retail market to further expand the brand."

As far as the hugging scandal is concerned, Ted Baker said it was "determined to learn lessons" from what has happened and from what its employees have said.

"The board are committed to ensuring that all employees feel respected and valued," it said.

At 0805 GMT, the shares were down 3.1% to 1,657p.

Liberum said: "The group faced a plethora of issues in FY18/19 and has delivered a credible result despite everything the group had to deal with. If anything else, this shows the determination of management and what is a highly capable team. Expectations are for mid-single digit profit growth, but free cash flow is growing, and we are now starting see operational leverage despite a tougher top-line.

"The market is seeing the confluence of both cyclical and structural dynamics but TED has all the armoury to overcome these; it is a brand, has invested in systems and logistics, eCommerce continues to power ahead, management depth is strong, and FCF is now improving."

It added that Ted Baker remains a business that is materially outperforming its peers.



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