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Has Ted Baker reasons for concern?

By Angela Gonzalez-Rodriguez

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Business |ANALYSIS

Ted Baker PLC (TED.LN) said Thursday that fiscal 2018 pretax profit increased 12 percent, but it also warned that trading conditions will remain challenging. The British fashion retailer warned of challenging conditions in many of its markets after late cold and snow both in Europe and the U.S.

The warning - snowy weather in Europe and the U.S. hit its early spring/summer trading - sent the company’s shares down more 8 percent Thursday. On the upside, the retailer’s annual pretax profit improved by 12 percent boosted by higher online sales.

Unseasonably cold weather hits Ted Baker’s spring collection sales

“The recent unseasonal weather across Europe and the East Coast of America has had an impact on the early part of trading for Spring/Summer,” the company said in a statement. Analysts at Liberum said Ted Baker’s results showed a “solid performance”, especially against such a tough backdrop.

or the financial year ended Jan. 27, the luxury fashion retailer made a profit of 68.8 million pounds compared with 61.3 million pounds the year prior. Revenue increased 11 percent (9.6 percent on a constant currency basis) to 591.7 million pounds. Pretax profit before exceptional items rose about 12 percent to 73.5 million pounds from 65.8 million pounds.

Analysts: with double-digit sales growth, it’s maybe not all doom and gloom on the high street

Notwithstanding the slightly downbeat language, these are very good results and with double-digit sales growth, it’s maybe not all doom and gloom on the high street," said Neil Wilson, analyst at ETX Capital.

"But although UK accounts for lion’s share of sales, Ted Baker is no yardstick for UK retail as this is increasingly a global brand rather than a pure British high shop,” further highlights Wilson.

Ted Baker said it anticipates further growth in the wholesale division, which should result in high single-digit sales growth in constant currency in the coming period. Ted Baker advanced that it plans to spend 30 million pounds on expansion plans over the year, which will go towards continued investment in new IT systems and more store openings and refurbishments.

Ted Baker founder and chief executive Ray Kelvin said: “The group’s good performance demonstrates the strength of the brand as well as the quality and appeal of our collections. 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.”

Ted Baker has “a clear strategy for growth across established and new markets”

Kelvin added: “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.”

“Ted Baker should continue to outperform the market though as it has proven track record and this is being delivered due to its agile and flexible model with more latterly a significant contribution from e-commerce,” Liberum analysts said. They maintained a “buy” rating on the stock.

“We anticipate that external trading conditions will remain challenging across many of our global markets,” the company said. To this regard, Charlotte Pearce, retail analyst at market researcher GlobalData, said: “While the latest news of struggles at Moss Bros, New Look, Mothercare and Carpetright has further ignited concerns over the state of retail in the UK, Ted Baker’s latest results provide a glimmer of hope as the premium lifestyle brand continues to build on its successes.

On a related note, Ted Baker lifted the final dividend to 43.50 pence a share from 38.80 pence, bringing the full-year dividend up to 60.10 pence from 53.60 pence.

Photo:Ted Baker, UK Web

Ted Baker