Ted Baker posts double-digit slump in profits

1753
Ted Baker profits
// Ted Baker pre-tax profit plunges 26.1% to £50.9m for the full-year period ending January 26
// Profit dented by £12.1m in exceptional costs. Without it, operating profit still down 14.3% to £63m
// However, group revenue up 4.4% to £617.4m
// Retailer had to grapple with challenging market and a scandal that forced founder to quit

Ted Baker has recorded a double-digit drop in profits in its latest annual results after a year that saw it grapple with a challenging retail environment as well as a scandal that forced its founder to resign.

For the financial year ending January 26, the fashion retailer booked a 26.1 per cent year-on-year plunge in pre-tax profits £50.9 million.

However, group revenue was up 4.4 per cent year-on-year at £617.4 million due to growing sales across the UK, Europe and North America.

The results come at the end of a challenging year for the company, where a total £12.1 million in exceptional items took its toll on the balance sheet.

This included the cost of an external investigation into the conduct of former chief executive and founder Ray Kelvin after Ted Baker was rocked with a sexual harassment scandal late last year.

The company was also forced to write off unpaid bills from House of Fraser after the department store went into administration last August, while the acquisition of No Ordinary Shoes added another cost.

Without exceptional items, operating profit still fell 14.3 per cent to £63 million.

Meanwhile, the competitive environment for retailers pushed Ted Baker to use promotional prices to attract customers, therefore placing further pressure on its gross margin, which fell from 61 per cent to 58.3 per cent.

“Performance has been impacted by the very difficult trading conditions throughout the year, including competitive discounting across the retail sector, consumer uncertainty, the well-publicised challenges facing some of our UK trading partners, and the unseasonable weather across our global markets at different points throughout the period,” executive chairman David Bernstein said.

“Despite this challenging backdrop, Ted Baker continues to develop as a global lifestyle brand reflecting the strength of the brand, the design and quality of our collections and the passion and commitment of our talented teams across the world.”

Bernstein has taken on his executive role to provide additional support to acting chief executive Lindsay Page, who assumed the role in the wake of Kelvin’s suspension last year.

Ted Baker employees had accused Kelvin of enforcing a “hugging” culture at the company, as well as massaging employees, kissing their ears and asking some to sit on his lap.

Kelvin resigned from the retailer earlier this month, 32 years after he founded it.

It’s expected that changes to Ted Baker’s senior team would be announced in due course, and Bernstein himself said he would not stay on as chairman beyond the end of November 2020.

Click here to sign up to Retail Gazette’s free daily email newsletter