Ted Baker loss grows, stays upbeat as new creative head "hits the ground running"
Ted Baker released its half-year results on Monday plus an update on Q3 and Q4, and the news was far from good. The 28 weeks up to August 8 saw its revenue falling almost 46% and its underlying pre-tax loss ballooned.
But the company said it has made progress with 'Ted's Formula for Growth' and saw strong cash generation, despite ongoing Covid disruption.
Looking at the most recent figures, the 12-week period since the first half ended saw “a particularly strong performance online”. But group revenue still fell 40% for Q3, and 37% for the start of Q4.
Online trading was “significantly ahead of management expectations” and in Q3, its e-tail sales rose 15%, representing 44.6% of total retail (up from 24.5% a year ago). But retail store sales were weak with a 53% fall as traffic remained low and some weeks saw enforced store closures.
Looking back at the first half, which included the full impact of lockdown store closures, group revenue dropped to £169.5 million while underlying pre-tax loss was £39 million – much bigger than the £2.7 million loss of a year earlier.
Retail sales including e-commerce fell 42.2% to £124 million. But online sales rose 41.8% to £74.2 million. It also saw growth in its own directly operated e-commerce channels of 56%.
Wholesale turnover dropped 55.7% to £39.5 million in a period when the company’s wholesale customers were under as much pressure as Ted Baker was.
Retail sales in the UK and Europe fell by 37.2% to £88.7 million and on reopening, footfall remained depressed, particularly in city centres and areas traditionally popular with tourists. But e-commerce sales in the region increased by 36.4%. Sales from its UK wholesale business decreased by 54.7% to £25.2 million.
Sales from its North American retail division dropped by 46.1% to £34.4 million. Disruption to trading in stores started later but was longer-lasting, reflecting the varying local responses to Covid across the region, as well as political and social unrest. It’s e-commerce business delivered a strong performance with sales increasing by 85.4%, while North American wholesale dropped 57.6%.
While its loss was primarily driven by the lower revenue, it was partially offset by the companies own cost-cutting actions.
CEO Rachel Osborne said: “Even with some of our legacy issues being amplified by Covid-19, our balance sheet is materially stronger than we had envisaged this early in the plan and operational cashflow will be positive for the full-year. We have strengthened our leadership team, made good progress against our brand, product and digital ambitions, and are on track or ahead of our operational KPIs for the first year of our plan.”
The company now has a new product pyramid in place “ensuring that brand identity is reflected in product while maintaining appropriate alignment with the market”. Its Mad(e) in Britain collection sits at the top of the pyramid and “sets the creative tone for the collection overall”.
NEW CREATIVE CHIEF
It has also just welcomed its new global creative director Anthony Cuthbertson who joined in November and who “has hit the ground running, bringing a new energy and creative vision to Ted Baker”.
Cuthbertson’s first full collection from design ideas to the shop floor, will be AW21, but customers “should start to see the creative direction improve during the Spring/Summer 2021 collections”.
Ted Baker said most of the AW21 offer will sit within the core and trend product categories - “product with proven characteristics of selling well for the business”. The new MIB or Mad(e) in Britain sub-brand launched only in early November and “will set the creative tone for the upcoming collections”.
It’s “a concept collection inspired by the eclectic creativity and culture of Britain that will drop four times per year in partnership with well-known talent, energising creativity and help to elevate the brand holistically”.
Elsewhere, refreshed product ranges have started flowing into the business from October, including a deeper and wider offer on more casual product, such as loungewear and modernised prints on Womenswear. It has reviewed and implemented new pricing structures for AW20 collections across both Womenswear and Menswear with the addition of more entry-priced product as well as more upscale pieces.
For instance, within Men's Tops, it added a £29 price point and “already had 80% sell-through on these options”. It also bought more heavily into nylon bags after seeing a strong sales reaction “and our core wool coat now has a new entry price point of £299 from £339 last year”.
In the Womenswear range it has moved its entry price point mix from 10% to 20% and has also “had a great reaction to our £89 joggers and to sweat tops”.
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