Profit warning and sales declines signal Ted Baker has passed its peak, says GlobalData

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Following today’s release of Ted Baker figures for the 19 weeks ending 8 June 2019, Sofie Willmott, lead retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Following years of admirable growth, the previously untouchable Ted Baker has had a terrible start to 2019/20 with retail revenue falling into negative territory, contributing to a profit warning and signalling that the lifestyle player has passed its peak.

“When incremental sales from the retailer’s acquisition of footwear brand No Ordinary Shoes are stripped out, retail revenue declined 1.1% and with challenging trading conditions anticipated for the remainder of the year, profit before tax is now expected to be £50-60m (versus £50.9m in FY2018/19). Following the disappointing results, shares nosedived, falling 25% this morning.

“As a result of its past success and demand for the brand, Ted Baker products are widely available from department store players like John Lewis and House of Fraser, and online pureplays including ASOS and Very.co.uk, but overexposure can damage brand appeal particularly when it is positioned at a premium level. Alongside this, the struggles of department store retailers coupled with the misconduct allegations against the brand’s founder, Ray Kelvin, who stepped down permanently in March, will not have helped its performance. To reverse its sales decline, Ted Baker must rein in the number of distribution partners it has, to reaffirm its premium positioning.

“Poor results were blamed on the tough trading environment, a promotional market and challenges with spring/summer collections but Ted Baker has reached a point where it will either sink or swim. For the brand to be able to survive without its former leader and retain its loyal shopper base, it must seize the opportunity to shake up the business and re-establish its brand identity.”