Ted Baker's H1 mixes challenges with triumphs, but brand stays strong

today Oct 4, 2018
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Ted Baker is always an interesting company to watch. Hugely successful, if it starts to falter you really know the retail sector is suffering. So did it stumble in its latest half year?

Ted Baker

No. Well, maybe a bit as it wrote off £0.6 million linked to the House of Fraser failure. For the 28 weeks to August 11, it said it made “continued progress in challenging trading conditions”. Translated, that meant group revenue up, but not by the huge leap we have come to expect and pre-tax profit down.

First, the figures. Group revenue rose 3.5% to £306 million (or 5.5% constant currency), impacted by the very hot summer in the UK and Europe. Its pre-tax/pre-exceptional items profit rose 3.2% to £25 million, but pre-tax profit with those one-offs excluded was down 3.2% to £24.5 million. 

Retail sales including e-commerce were up 1.1% (2.9% constant currency) to £220.1 million. UK and Europe retail sales rose 1% (0.7% constant currency) to £147.1 million. North America retail sales rose 1.8% (but a healthy 8.1% constant currency) to £61.8 million, and the rest of the world saw retail sales falling 1.8% to £11.2 million (although they were up 1.8% constant currency).

But here’s the thing - its e-tail sales stormed ahead by 24.1% (25.7% constant currency) to £53 million.

The conclusion? Its retail stores struggled in the period to ignite interest but the brand remained hugely popular and its customers switched online at a fast rate.

That’s clear from the fact that retail sales per square foot (excluding e-commerce) fell 9.4% (7.8% in constant currency) to £396 “demonstrating the challenging external trading conditions together with changing customer behaviour with customers shopping both online and in-store.”
And the retail gross margin fell to 64.2% from 65.6% on the back of “a measured increase in promotional activity.”

So it’s interesting that the company is still putting its full weight behind its stores. It opened two in the UK, three in the US, one in Spain, two new outlets in Germany and one in France in the period. And it added more concessions in department stores across the UK, Europe and North America. Plus there were licensee openings in India, Kazakhstan, Malaysia, Mexico, Singapore, Taiwan and Ukraine.

Ted Baker

Fortunately, its wholesale turnover was up a strong 10.1% (12.8% in constant currency) to £85.9 million and licence income was up 11.7% to £10.9 million.

But the company said that “global markets have continued to see challenging external trading conditions. In the UK, Europe and the East Coast of America, trade has also been affected by the unseasonably hot weather in September [and] trading in the UK has been impacted by the well-publicised challenges facing some of our trading partners.”


It paints a picture of a company whose products are appealing, even in tough times, and which is working to balance sales across its different arms to cope with the unique conditions the retail sector finds itself in. Let’s not forget that e-tail often has retail stores to thank for its success as the ability to touch and feel, and pick up, in-store is a key complement to online ops.

What did CEO Ray Kelvin have to say? “Ted Baker has continued to develop and expand despite challenging external trading conditions. Whilst we believe that the second half of the year will remain challenging, we are well positioned to continue [our] long-term development.”

The company has an increasing global presence that’s helping it through the tough times at home with 544 stores, concessions and outlets worldwide, only 201 of them in the UK.

But as well as global expansion, it’s looking to boost the business via “considered” expansion of its collections. And this seemed to pay off in the half as there were “notable performances from product licensees in Childrenswear, Eyewear, Fragrance and Skinwear and Suiting.” 

It’s also gearing up for fast growth in North America and in July, it started the transition to its new distribution facility there that will serve its retail, wholesale and e-commerce businesses.

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