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Feb 11, 2021
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Ted Baker hit by low partywear demand and Brexit issues in Q4

Published
Feb 11, 2021

Ted Baker is one of the last of the big names to deliver a Christmas quarter trading update and on Thursday it said that the 13 weeks from November to the end of January sent its revenues plunging.


Ted Baker


But ahead of its full-year results (due in late May), the firm said its transformation plan was “on track [in Q4] despite Covid disruption”.

Unfortunately, it expects that disruption to have “an ongoing materially negative impact across both channels from store closures” until the end of May, followed by “a phased recovery until the end of the first half”.

And following JD Sports’ boss Peter Cowgill saying Brexit is worse than he expected so far, Ted Baker said that following the ‘tariff and quota-free’ Brexit deal late last year, costs have risen. It said “the group anticipates up to £5 million of incremental costs, reflecting extra duty and shipping costs partially offset by a new customs warehouse capability”.

But what actually happened in Q4? Its group revenue fell 47% year-on-year as it saw "a material negative impact” from the pandemic with its UK store estate closed for most of the period, along with much of its international portfolio.

And when stores were open, “footfall shifted towards out-of-town and [to] neighbourhood retail locations where we have minimal physical presence,” it explained. In addition, “sales have been adversely affected by a decline in outerwear and occasionwear demand during the Christmas period”.

But its casual offer “has been sought out by our customers. Sell-through rates have been above average on tops, trousers, accessories and footwear”.

Its sales fall also reflected “selective permanent closures where commercial lease agreements could not be reached with landlords”.

The revenue figure wasn’t helped by wholesale and licence turnover dropping 44%, due to “cautious ordering from store-based trustees since the beginning of Covid and Brexit-related shipping delays towards the end of the period”.

Most of the above was bad news, of course. But the really bad news was that e-commerce only filled the gap a little. E-commerce has been a saving grace for so many fashion retailers in the past year. But Ted Baker’s D2C e-tail sales only rose 2%, damaged by the aforementioned low demand for the core party offer and its outerwear. And overall group e-commerce sales even fell 1%. Despite that drop, they represented 63% of the firm’s smaller total retail sales figure, up from 33% a year ago.

However, a new e-commerce platform, “which will significantly improve functionality and flexibility remains on track for launch at the end of the current quarter”.

And on the plus side, it said its China, Hong Kong and Macau joint venture continued to see “robust sales growth, with 14% sales growth during the period and 33% on mainland China”.

The company may be struggling overall, but it seems to have enough cash to get through the crisis with net available liquidity of £199.7 million, comprising £66.7 million of cash and £133 million of bank facilities. The group didn’t draw on any bank facilities during the period. And it has plenty of liquidity headroom against its anticipated peak cash requirements in September/October this year.

The company also announced a new licensing agreement “demonstrating ongoing progress on its digital and asset-light growth strategy”.

Bedeck has signed on as a new product licence partner for bedding and towels as of January 2022, “with a key priority to expand the global reach of Ted Baker with these products”.

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