Nov 11, 2021
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Ted Baker results improve but it still lags 2019, sees big opportunities globally

Nov 11, 2021

Ted Baker returned to growth and improved its profitability, but it remained loss-making in the 28 weeks up to 14 August, the company said on Thursday. And it delivered a trading update for Q3 (the 12 weeks to 6 November), highlighting further improvement, although it’s still lagging where it was pre-Covid.

Ted Baker

Looking at that most recent Q3 period first, subdued footfall remains an issue but group revenue was up 18%, driven by recoveries in the retail store channel, wholesale and licencing.

Retail store sales were up 34% year-on-year (YOY) but down 38% against Q3 in 2019 (2YOY). 

And it said “there remains sharp divergence in performance across our store groupings, with Town and City stores returning most strongly towards [2YOY] levels. Our stores with exposure to Travel retail and International Travel remain significantly down as footfall remains weak”.

E-commerce was down 10% in Q3 YOY as shoppers understandably returned to physical stores, but it was up 4% 2YOY. 

And wholesale and licencing was up 24% YOY. But the fact that it was down 33% 2YOY shows there’s still plenty of work to be done. The YOY improvement, however, reflected the “ongoing recovery of store-based trustees and good progress from a number of product licences, including Next (Childrenwear and Lingerie), Baird (formal suiting) and both Eyewear partners”.

Looking at the wider picture, the company said its seeing continued sequential quarterly improvements with better margins as it re-establishes its premium positioning. The full-price sales mix was up over 500bps during H1 and Q3 and the firm talked of “robust liquidity”.

It also said it’s currently experiencing only “limited negative impact from the global supply chain disruptions or rising inflation” and has “a basket of mitigation strategies to minimise the impact of further supply chain disruptions as well as cost inflation”.

Now for those first-half figures. CEO Rachel Osborne said the firm is “delivering against our Transformation Plan” as she reported first-half group revenue up 17.6% YOY but down 36.4% (2YOY) at £199.3 million. 

The company’s reported H1 loss before tax was £25.3 million, which was an improvement on the £86.4 million loss of a year ago. But that more-than-70% improvement YOY has to be seen in the light of a 10.1% decline 2YOY. 

At least the gross margin improved by 250 basis points to 55.7% as the company drove through more full-price sales, which was reflected in the narrower loss this time. 

H1 brand sales rose 23% to £433 million and the 17.6% YOY revenue rise was driven by a return to retail growth and the partial relaxation of Covid restrictions globally.

Retail sales including online rose 10.4% to £136.9 million YOY and were up 14.1% currency-neutral. H1 e-commerce sales were £63.6 million, which was down 14.2% YOY as the sales performance was “impacted by the move away from last year's heavy promotional stance in order to re-establish premium positioning”. But H1 e-commerce was up 22% since the pre-Covid period.

The company also said its “re-energised product” has been driving sales growth in line with expectations. The “sales mix of trend product improved in womenswear as customers adopt the new collections”. For menswear, newer entry-priced products within the core collection performed well. 

Within clothing, occasionwear product has seen a strong pick-up across men's and women's collections. In particular, formalwear and suiting have shown a “marked pick-up”. And it has seen strong performance across women’s accessories and footwear, while men’s footwear has “outperformed”.

Geographically, UK and Europe revenue rose 11.2% in the half YOY, North America rose 32.9%, and the smaller rest-of-the-world unit more than doubled. 

And the firm added that as the second half progresses, regionally it sees “a wide range of growth opportunities, further establishing Ted Baker as a true global lifestyle brand”. Following “extensive research and analysis”, it has  identified North America, Germany, China and the Middle East “as priority markets” that provide “material profit growth opportunity with limited capital investment”.

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