Ted Baker profits and revenue rise despite 'challenging' conditions
By Michele Maatouk
Date: Thursday 22 Mar 2018
(ShareCast News) - Ted Baker reported a 12% jump in full-year pre-tax profit on Thursday as revenue grew but the retailer warned that "external" trading conditions will remain challenging.
In the year to 27 January 2018, pre-tax profit rose to £68.8m from £61.3m on revenue of £591.7m, up 11% from the previous year despite a challenging backdrop. Adjusted earnings per share rose 12% to 127.7p and the company lifted its total dividend by 12% to 60.1p a share.
Retail sales including e-commerce were up 10.4% to £442.5m as the group increased its average square footage by 5.9%, with sales in the UK and Europe up 7.7% to £301.1m. Meanwhile, retail sales in the US and Canada were 16.2% higher at £120.1m.
E-commerce sales rose 40% to £101.1m and wholesale sales were ahead 14.6% to £149.2m.
The company opened a new store at London Luton Airport during the year and plans to open new stores at Barcelona Airport and London Bridge station, an outlet in Lyon and its first outlet in Neumunster, Germany, along with further concessions in the UK, France, Germany and Spain.
In North America, it plans to open stores in Austin and Orlando, along with further licence partner concessions in Mexico.
In the rest of the world, Ted Baker said it remains focused on building brand awareness, as it's still in the relatively early stages of investment.
The company said recent unseasonal weather across Europe and the East Coast of the US had affected the early part of its spring/summer and that it expects external trading conditions to remain challenging across many of its global markets. However, it also stressed that the new season collections have been well received.
Founder and chief executive officer Ray Kelvin said: "I am pleased to report a year of continued progress in Ted Baker's expansion as a global lifestyle brand. The group's good performance demonstrates the strength of the brand as well as the quality and appeal of our collections.
"Ted Baker's continued success is driven by the passion and talent of our global teams. I would like to take this opportunity to thank our colleagues across the world for their hard work and Tedication during the year.
"Our new collections have been received positively and although we anticipate external trading conditions will remain challenging across many of our global markets, the strength of our brand and business model mean that we remain well positioned to continue the group's momentum and long-term development. We have a clear strategy for growth across both established and new markets which is underpinned by our controlled, multi-channel distribution as well as the design, quality and attention to detail that are at the heart of everything we do."
At 0950 GMT, the shares were down 8% to 2,706p.
Mike van Dulken, head of research at Accendo Markets, said the results were "solid" but as with many other retailers of late, the company "has fallen foul of its outlook statement" with management anticipating trading conditions will remain difficult.
"More cautious investors are clearly not prepared to look through this observation, for fear of it actually sugar-coating what could be a worsening in recent trading conditions. After all, the message from the high street this week was hardly one of optimism. And as much as growth levels are handsome double-digits (retail, wholesale, internet and licensing), there is also a worry that GBP's recent climb is eroding what has been a rather helpful FX boost."
George Salmon, equity analyst at Hargreaves Lansdown, said: "The arrival of the Beast from the East in early March was untimely for clothing retailers to say the least, as it came just as they started to push spring/summer collections. While the cold snap has seen trading slow a touch, investors should nonetheless be reassured that Ted is confident this season's lines will fly off the shelves once things warm up a bit.
"Overall, we think there's several reasons to be optimistic about Ted's long-term prospects. The group's quirky designs offer high-fashion at accessible prices, and thus fill an attractive niche in market. We also like the fact expansion has been well-managed, and recent years have seen Ted grow without stretching the balance sheet too much. That makes the unexpected increase in debt something of a blot on the copybook, although to be honest we're still some way off it becoming a problem."
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