Ted Baker shares crash as retailer swings to £23m loss
Ted Baker’s share price crashed 25 per cent as markets opened today, following a disastrous set of results that saw it swing to a loss and warn on its full-year results.
Investors sold out of the embattled fashion retailer to take shares down almost 28 per cent as it booked a £23m half-year loss for the six months to August.
Read more: Debenhams finance chief quits after just 12 months to join Ted Baker
The high street brand blamed factors including a challenging trading environment, acquisition costs and £2m from the fallout of misconduct allegations against its ex-CEO.
Ted Baker’s share price plunged 27.8 per cent to 668.5p in early trading, down from yesterday’s close of 925.5p.
The figures
The fashion retailer saw losses hit £23m in the six months to August after reporting £24.5m in pre-tax profit this time last year, a 194 per cent drop.
Meanwhile revenue slipped 0.7 per cent year on year to £303.8m.
Basic earnings per share nosedived 207 per cent to see shareholders slump to a 46.1p loss per share.
Ted Baker kept its interim dividend, but it plummeted 56.4 per cent to 7.8p per share, down from 17.9p last year.
Why it’s interesting
The retailer blamed “very difficult trading conditions” for its falling sales and profit, and warned that 2019-20 revenue could drop below last year’s figure if conditions fail to improve.
Ted Baker cited a 14 per cent rise in distribution costs after opening a US warehouse last year and a 22.4 per cent hike in admin costs for its drop in profit.
Both relate to its acquisition last September of US-UK retailer No Ordinary Shoes.
It also pointed to challenges facing Ted Baker’s partners “against the backdrop of the continuing shift towards an increasingly digital retail landscape”.
Ted Baker’s own e-commerce revenue dipped 1.3 per cent to £52.3m, on top of a 2.5 per cent drop in overall retail sales to £214.5m.
Chairman David Bernstein said: “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.”
Bernstein also warned that trading has started slowly in the second half of the year, 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,” he warned.
A one-off £17.4m cost concerning accounting adjustments related to its purchase of No Ordinary Shoes hurt profit, as did a £2m hit from costs into investigating the company’s founder over misconduct allegations.
Ted Baker booked another £11.8m charge on an expected loss as it restructures its legacy business in Asia.
“It was another wardrobe malfunction at Ted Baker,” Fidelity Personal Investing associate director Ed Monk said.
“June’s profit warning had already lowered expectations and that was borne out in today’s numbers. The outlook from here remains tough and the company warned the second half had also started badly. If that continues then full-year profits will be worse than last year.
“Ted Baker pointed to heavy discounting among fashion retailers as a factor behind the falling sales. Investors have already seen the share price plunge this year and the results today show why the market is cautious.”
Read more: Ted Baker seals deal to expand into Japan
What Ted Baker said
Lindsay Page, chief executive, said:
We are continuing to proactively manage the significant challenges impacting our sector including weak consumer spending, macro-economic uncertainty, and the accelerating channel shift towards e-commerce. However, we are not immune to these pressures which have impacted our financial performance during the first half of the year.
Despite this, we have delivered a number of important strategic developments including reorganising our Asia operations to drive long term growth, integrating the acquired footwear business and signing an important new product licence partnership for childrenswear. Our Autumn/Winter collections have been well received and we are excited about our new product initiatives including monthly product drops and speed to market developments.
We remain actively focussed on cost control and driving further efficiencies. Despite the structural challenges and cyclical pressures on the industry, we remain confident in Ted Baker’s ability to navigate the market and further develop as a global lifestyle brand. This confidence remains underpinned by the Group’s flexible, omni-channel model, the continuing strength of the brand, and the skill, passion and commitment of our talented teams worldwide.
Main image credit: Ted Baker