Ted Baker’s shares bleed as retailer slumps into the red

Retailer loses £23m in six months to 11 August, versus £24.5m profit a year earlier

(Reuters)

Ted Baker shares plunged almost 39 per cent after the upmarket retailer revealed large losses, with executives blaming forced heavy discounting, wary consumers and an unsuccessful new collection.

Losses for the six months to 11 August came in at £23m, in sharp contrast to a £24.5m pre-tax profit reported a year earlier – although the bottom line was partly pressured by a major investment to overhaul Ted Baker’s struggling Asian businesses.

The results sent shares plunging 29 per cent in early trading on Thursday. But by late afternoon, they were down as much as 38.9 per cent.

Sales also fell 0.7 per cent and bosses warned that the company will continue to struggle in the second half of the year if market conditions do not improve, pointing out that the warm weather in September is already having a negative impact.

The fashion brand also suffered from the troubles of Debenhams and House of Fraser in the UK and Nordstrom and Bloomingdale’s in the US – department stores where Ted Baker had a significant presence.

It took a hit of £600,000 from the collapse of House of Fraser alone.

Chairman David Bernstein said: “Trading conditions have been characterised by unprecedented and sustained levels of promotional activity across the sector with, in several cases, distressed discounting from brands and retailers and heightened competition.

“The group’s performance has been impacted by very difficult trading conditions throughout the period, amplified by heightened levels of consumer uncertainty across many of Ted Baker’s global markets.

“The financial results we delivered in the first half were behind our expectations. Trading in the second half has started slowly, not helped by the unseasonably warm weather in September, and this will have an impact on the full-year outcome. If these trends continue, we will achieve a second-half result below that of last year.”

Ted Baker, which has 560 stores and concessions around the world, spent £11.8m improving its Asian businesses and £3.5m on its footwear division.

It also announced a new partnership with Next in the UK to sell some of its ranges, following the administration of Debenhams.

Three new stores were opened in the period – two in Germany and one in the US – and a new partnership was announced to create a joint venture in Japan.

Ted Baker also revealed that its independent inquiry into the behaviour of founder and former chief executive Ray Kelvin has cost £2m in legal fees and other expenses.

Mr Kelvin was forced to quit the business he founded after staff complained he acted inappropriately in the workplace, including hugging and unwanted touching.

He denies any wrongdoing.