‘Tired shoulders’ of Ted Baker hit by store closures over Christmas

Ted Baker has revealed that retail sales fell by nearly half in the quarter covering its usually strong Christmas period due to store closures and footfall moving away from city centres.

It said they plummeted by 47 per cent between November 1 and late January, while it blamed more prudent demand from store-based trustees for its wholesale and licence revenues sinking 44 per cent.

The firm now expects sales in both retail and wholesale to remain depressed until at least the end of May before making a ‘phased recovery’ in the first half of the financial year. Its shares were down 4.5 per cent to 99.6p soon after midday.

 Ted Baker was forced to shut all its UK outlets for most of the last three months as the government imposed two national lockdowns in England

It also forecasts incurring up to £5million in extra duty and import costs related to the UK’s departure from the European Union, though it believes enhanced customs warehouse operations will offset this.

Ted Baker was forced to shut all its UK outlets for most of the last three months as the government imposed two national lockdowns in England, with the first lasting from November 5 to December 2, and the latest one starting on January 5.

Even when the national lockdowns were not in force, it was knocked by significantly lower numbers of shoppers on the high street, as well as plunging demand for its Christmas staples – coats and party wear.

Many clothing stores and other non-essential shops were also forced to close in some areas when the government introduced a tougher tiered restriction system.

International stores were additionally subject to closures. However, the London-based firm reported substantial sales growth of 14 per cent in China, Hong Kong and Macau, with Mainland China registering a 33 per cent rise.

‘Trading over the fourth quarter was difficult and heavily impacted by the Covid pandemic,’ remarked chief executive Rachel Osborne, who added that the company was ‘taking a cautious planning approach.’

Ted Baker introduced its transformation plan after it was struck with declining sales, profit warnings, and scandals involving its accounts and the behaviour of founder Ray Kelvin

Despite the Ted Baker’s sales and financial troubles, Osborne said it was making ‘strong progress’ on its transformation plan – known as ‘Ted’s Growth Future.’ 

The plan was introduced after the firm was struck with declining sales, profit warnings, and scandals involving its accounts and the behaviour of founder Ray Kelvin. It share price has plunged by over 95 per cent in the last three years.

Strife: Ted Baker saw e-sales drop despite the online shift across the retail sector 

It has already sold its former Ugly Brown Building headquarters in Kings Cross for £78.8million, cut 950 jobs, raised equity worth £105million, and renegotiated rent payments for its shops to help enhance its finances. 

Gaining new product licence deals is also a part of the strategy, and the group has announced a new licensing partnership today with homeware brand Bedeck for bedding and towels. 

Osborne stated that the retailer’s ‘robust balance sheet and strong cash position leave us well placed for the future and we remain confident that Ted will emerge from Covid a stronger and more resilient business.’

The group is pressing ahead with the launch of a new online sales platform at the end of the first quarter as it looks to ramp up its internet trade in the face of a high street bloodbath.

It saw online sales drop one per cent despite the shift online across the retail industry, though its e-commerce trade now accounts for 63 per cent of total sales, up from a third a year ago.

Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said that Ted Baker ‘wasn’t in the greatest position before the crisis, meaning coronavirus has simply added weight to already tired shoulders.’ 

She added: ‘A disappointing online business meant profits were already feeling the effects of falling high-street footfall. The latter is particularly worrying as the pandemic has accelerated the shift to digital shopping.’ 

But she granted that ‘the pandemic has forced it to get into shape, streamlining its operations and honing its products. 

‘That means on the other side of all this, we could actually be looking at a stronger business.’ 

This post first appeared on Dailymail.co.uk