Page exits Ted Baker, lower sales mean business review
Times are tough at Ted baker and when that happens, CEOs are in the firing line. So it was perhaps no surprise that the company announced just ahead of its trading update on Tuesday that chief executive Lindsay Page is stepping down immediately. Rachel Osborne, who had become CFO only last month, is now acting CEO.
Page had himself been acting CEO after the ‘hug-gate’ scandal involving company founder Ray Kelvin forced him to step down last year. But Despite Page’s 22-year association with the retailer and the feeling that he was a safe pair of hands, the firm’s results have continued to be less than impressive.
The company got straight to the point in its trading update and said it has scaled back its pre-tax profit expectations for the year to January 25 to a range between a lowly £5 million and a potential £10 million, “dependent on Christmas trading and final year-end review”.
It added that trading over November and the Black Friday period was “below expectations, with lower-than-anticipated margins and sell-through” and “that difficult trading conditions will continue, and therefore it is appropriate to take a more cautious outlook for the remainder of the financial year”.
It wasn’t exaggerating when it said “the last 12 months has undoubtedly been the most challenging in our history,” but it seems to remain confident that the Ted Baker brand remains “well supported by our customers, partners and trustees and we appreciate their ongoing support”.
It also said it’s taking the necessary immediate actions to address underperformance and improve efficiencies across the wider group "and [we] are confident that these will return the group to a stronger position and continue the brand's long-term development”.
In the short tern, this means a cost, efficiency and business model review conducted by independent consultants Alix Partners, and a suspension of the dividend.
What prompted all this was the fact that, despite its No Ordinary Shoes acquisition that should have boosted revenue, group revenue in the 17 weeks to December 7 actually fell 0.3% to £203.8 million, or 1.2% currency-neutral. On an organic basis (that is, without the impact of acquisitions and disposals), it was down 3.1%, or 3.9% currency-neutral.
The firm’s Retail division fell 5.7% to £143 million (-6.4% currency-neutral), while Wholesale rose 15.1% to £60.8 million (+13.7% currency-neutral). But organic Wholesale revenue rose only 1.9%, (although at least it was an increase, boosted by the firm’s move to monthly product drops).
The Wholesale figure was almost the only piece of good news and even e-commerce sales fell 0.7%, although they now represent a larger 31% of the firm’s total revenue. Despite issues in the UK and Europe, its US e-tail has been powering ahead with a 28.9% currency-neutral rise on its own site.
So, with the search for a new CEO due to start next month, the future for Ted Baker remains unclear. 2020 will undoubtedly be a make or break year for the firm.
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