Ted Baker hit hard by lockdowns but is now "in a much stronger place"
Ted Baker’s twice-delayed full-year results looked grim on Monday as the fashion retailer announced a 44%+ drop in revenue and a pre-tax loss that widened by almost 39%.
The 53 weeks to January 30 covered the height of the pandemic and was always likely to be a bad time for the business. But the company also highlighted the strategic progress it had made and its “increasing brand strength”.
Yet that didn’t help it post-period-end as Monday also saw the company reporting Q1 revenues for the 12 weeks to April 24.
Q1 was hit hard by store closures due to the latest lockdowns in the UK, Europe and Canada for parts of the period. Group revenue fell 19.9% in total, or 17.3% constant currency.
E-commerce sales rose during the quarter by only 4.5%, although that’s 25.9% higher compared to the ‘normal’ Q1 during 2019. And it achieved the rise despite taking “a less heavy promotional stance compared to the prior year”. That helped the gross profit margin for e-commerce to increase around 250 bps.
But retail stores are (in usual times) the bigger business channel for the firm and Q1 revenues here were down 40.7% year-on-year and down 73.1% compared to the same period two years ago.
Globally, the group lost plenty of trading days this time last year, but it lost 10 more trading days during the latest quarter than the prior year. Yet it said it’s “encouraged with how our UK stores have performed since reopening on 12 April, albeit that revenue remains below  levels”. Its retail stores in “metro cities and travel retail locations accounted for 36% of pre-Covid global store revenues and those stores remain materially below trading levels from two years ago.
Q1 Wholesale and Licence revenue was down 22.4% and down 48.3% compared to two years ago, “reflecting cautious ordering from store-based trustees, as well as continued restrictions on store openings in Europe”.
So that’s where ted Baker is at today, but looking back at the financial year that was the main focus of Monday’s results release, the company said group revenue fell 44.2% to £352 million. That figure was somewhat flattered by the latest year containing 53 weeks. The company estimated the extra week added around 2% to the revenue figure.
The underlying pre-tax loss for the year was £59.2 million compared to a profit of £4.8 million in the previous year. The final pre-tax loss was £107.7 million, wider than the £77.6 million of a year earlier.
Retail sales, including e-commerce were down 42.2% to £254.3 million. But e-commerce sales rose 22% to £144.9 million. Growth in its directly-operated e-commerce channels was 30.2%. Wholesale fell 50.3% to £85.3 million.
The weak year was only to be expected, but the company chose to focus on its transformation in the results report and talked about its three-year plan, saying “progress in executing this plan has been encouraging, despite several of the legacy issues facing the business having been amplified by Covid”.
It said the Ted Baker brand “remains healthy, notwithstanding the impact of extensive store closures during the pandemic lockdown period. Customers have responded positively to our refreshed social media, campaign imagery and new product. NPS increased during the period and we have 1.2m active digital customers”.
It said it has kept “a tight grip on working capital” and has seen the implementation of a new commercial stock cycle. And it has taken action to cut costs.
Importantly, it said its China joint venture, “delivered strong growth in first full year of operation”. Its Chinese business grew 6% during the year, despite the store closures during the first quarter of that year. Growth was “robust in both stores and online and we have a healthy pipeline of new stores in the year ahead”. And the subsequent Q1 has seen growth of 262% vs the prior year and 47% growth compared to two years ago.
CEO Rachel Osborne said of all this: “We are making good progress against our strategic transformation plan and Ted Baker is increasingly well placed to take advantage of the significant growth opportunities ahead of us.
“While the impact of Covid-19 is clear in our results and has amplified some of the legacy issues impacting the business, Ted Baker has responded proactively and is in a much stronger place than it was a year ago.”
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