Mar 22, 2018
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Another great year for Ted Baker but weather woes dent spring trading

Mar 22, 2018

Ted Baker is very used to delivering good news and it would be quite a break in tradition for it to do otherwise. So when it unveiled its full-year results on Thursday expectations were high.

Ted Baker

Did it deliver? Yet it did. It hailed “continued progress in [its] expansion as a global lifestyle brand,” which may not sound that bullish, but in tough times any step forward is a big achievement and Ted Baker is certainly taking some big steps. And even though comparable sales took a hit, its e-tail and North American surge made up for any shortfalls.

But a note of caution - the current year isn’t looking quite so good at this early stage. The company didn’t give specific figures but did say “the recent unseasonal weather across Europe and the [US] East Coast has had an impact on the early part of trading for spring/summer.” Hmmm. That’s bad news and it would have been good to know just how bad the impact was, although given that this is Ted Baker, the assumption has to be that it will bounce back.

Company chief Ray Kelvin did say that “new collections have been received positively and although we anticipate external trading conditions will remain challenging across many of our global markets, we remain well positioned to continue the group's momentum and long-term development."


So let’s look at the headline figures in detail. Group revenue in the year to January 27 rose 11.4% to £591.7 million (+9.4% with exchange rates fluctuations factored-out). And pre-tax profit advanced a larger 12.3% to £68.8 million. 

Ted Baker Menswear did well with sales up 10.1% to £249.7 million, representing 42.2% of the total. And Womenswear shone even brighter with sales up 12.4% to £342 million to make up 57.8% of total sales. The growth in the womenswear mix was driven by space allocation and an impressive e-tail sales rise as it sells a higher percentage of womenswear online, reflecting recent studies that show women are bigger e-fashion shoppers than men.

The firm’s global Retail sales rose 10.4% (8.5% in constant currency) to £442.5 million, while UK and Europe retail sales (including online) were up 7.7% (6.4% constant currency) to £301.1 million. US and Canada retail sales powered ahead by 16.2% (12.4% constant currency) to £120.1m with the brand “becoming more established and continuing to gain recognition in this territory."

And e-tail? As mentioned, the company saw a storming performance with sales up 39.8 % (38.7% constant currency) to £101.1 million. In North America, e-tail rose 66.3% (61.4% constant currency) to £16.3 million and now accounts for 13.6% of the total there.


But it’s clear that Ted Baker is facing some challenges in physical stores just like the rest of the market.
It said the 10.4% growth in retail sales (including e-commerce, which is now almost 24% of total retail sales) exceeded the increase in average retail square footage of 5.9%. But while that comparison looks good, e-tail clearly provided a big boost. In fact, physical store retail sales per square foot (excluding e-commerce) fell 1.9% (or 3.9% constant currency) to £832 “demonstrating the changing customer behaviour with customers shopping both online and in store.”

But at least the retail gross margin increased to 67% from 66.1%, reflecting a change in mix between full-price and outlet sales and also an improved full-price sell-through in its retail channel.

Ted Baker

Wholesale did well too with a 14.6% (13.3% constant currency) rise to £149.2 million and a 24.7% North American rise. This reflects a good UK performance that includes supplies to its licensed stores and its export business, as well as a strong performance from the North American wholesale business. And further wholesale growth should mean a high single-digit rise in constant currency in the current period.

Meanwhile licence income was up 17.6% to £21.4 million as its licence partners opened further stores and concessions in Australia, Dubai, Indonesia, Kuwait, Lebanon, Mexico, Qatar, Saudi Arabia and Turkey.


In fact, looking at those numbers  and even with the comp sales issue, it’s surprising that Ted Baker wasn’t more bullish, but we have to assume that the current environment really is tough and even a ‘superbrand’ like this one is feeling a bit of the pain.

Ray Kelvin (who thanked staff for their hard work and “Tedication”) said the company has “a clear strategy for growth across both established and new markets"

And unlike many weaker businesses that are reining-in their store opening plans, Ted Baker is set to open more. It already has 532 stores (]with 195 in the UK, 113 in Europe, 127 in North America, 88 in the Middle East, Africa and Asia and nine in Australasia. This financial year it has opened a new one in London Luton Airport and plans to open in Barcelona Airport and London Bridge station, underlining the growing importance of travel retail, whether those travellers are flying or simply commuting.

It will open an outlet in Lyon and its first outlet in Neumunster, Germany, along with further concessions in the UK, France, Germany and Spain and will continue to invest in its e-commerce sites “to enhance the customer experience.”

And in North America, it will further develop its presence with openings in Austin and Orlando, along with further licence partner concessions in Mexico. Meanwhile, in the ‘Rest of the World’, it remains “focused on building brand awareness, as we are still in the relatively early stages of investment.” In line with its development strategy in this territory, it will open a further concession in Japan.”

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