// Ted Baker completes £78.75m sale of Ugly Brown Building HQ in London to British Airways’ pensions scheme
// It has suspended all non-essential capital expenditure, stopped discretionary operating expense amid coronavirus
// However, it highlighted minimal disruption to supply chain, with majority of Chinese factories now operational
Ted Baker has announced that is has agreed terms for the sale of its London head office building while also providing an update on circumstances due to the coronavirus crisis.
The fashion retailer confirmed that it has exchanged contracts with a wholly owned subsidiary of British Airways Pension Trustees Limited in respect of the sale of The Ugly Brown Building, the London building that houses the Ted Baker headquarters.
Ted Baker said consideration for the sale is £78.75 million and will be paid in cash on completion, which is expected to take place in June 2020.
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The retailer added that the net proceeds of the sale of at least £72 million will be applied to repay existing indebtedness to significantly de-lever the company.
As a result of the sale, Ted Baker has entered into a short-term lease of the building but once the sale is complete in June it would enter into an option to take a long-term lease of part of an adjacent newly developed property.
Ted Baker also announced that its lending bank syndicate continues has agreed to increase the headroom under its facilities by £13.5 million until December 2020.
The retailer said the availability of this additional funding provides further financial flexibility while Ted Baker continues to carry out its transformation programme.
Ted Baker said full details around this would given in its full year results in May.
Meanwhile, the fashion retailer said it continued to monitor and respond to government advice, as well as partake in dialogue with relevant trade associations, across all of its trading markets amid the deepening coronavirus crisis.
Ted Baker confirmed it would take a series of steps to reduce costs and protect cashflow, including suspending all non-essential capital expenditure, stopping discretionary operating expenses, and severely restricting travel.
It added that “all available opportunities” to agree rescheduling or reduction of payments are being explored with the landlords, suppliers and the HMRC, especially since the government’s announcement yesterday to cover up to 80 per cent of wages.
Ted Baler also welcomed the government’s business rates holiday for the next 12 months, highlighting that it paid business rates of £6.2 million in the current financial year.
The fashion retailer went on to highlight that there been minimal disruption to its supply chain, with the majority of its factories in China now operational again.
“The group does not currently envisage supply disruptions and inventory levels are sufficient,” Ted Baker said in a statement.
The British fashion brand said 197 of its stores and concessions have temporarily closed out of a total 416 locations globally, due to lockdown measures in the US, Canada, France, Spain, Germany, Portugal and Belgium as a result of the coronavirus pandemic.
Ted Baker said these markets represented approximately 38 per cent of its global retail sales.
“Ted Baker’s ecommerce channel has proved much more resilient and the performance in the financial year to date (last eight weeks) has been up 16 per cent on last year, albeit with some variability across recent weeks,” the retailer said.
“The ecommerce service continues to operate for customers as normal, and is a channel the group will be intensively managing during this period of store closures.”
Ted Baker also said it was too early “to provide meaningful guidance for FY 2021” but the company would update investors during the full year results results in May.
In line with prior guidance, Ted Baker anticipated underlying pre-tax profit to be within the £5million to £10 million range for the year ended January 26.
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