Appointment of Japanese Retail Licence PartnerSource: RNS
28 August 2019
Ted Baker Plc
Appointment of Japanese Retail Licence Partner
Conversion of existing directly operated business into an exclusive retail licence for the Japanese market, effective 1 October 2019.
Sojitz Infinity as appointed Japanese Retail Licence Partner will leverage its local market knowledge and expertise to accelerate the long-term growth of Ted Baker in Japan.
Anticipated transaction related costs of approximately £4m, of which approximately £3m are anticipated to be in cash.
It is expected that the new operating model will have a marginally positive impact on pre-tax profit* from the current financial year and greater benefit in the further years of the licence.
Ted Baker, the global lifestyle brand, is pleased to announce that on 28 August 2019, it entered an agreement with Sojitz Infinity Inc. ("Infinity" or the "Licence Partner") to create an exclusive retail licence deal for Japan, initially for five years. Infinity will drive the long-term expansion of the Ted Baker brand in the region, combining its local expertise, especially within the department store sector, with the proven buying, merchandising and brand-building expertise of Ted Baker. The Group anticipates the retail licence commencing on 1 October 2019. Following this appointment, Ted Baker will have 17 Retail Licence Partners across the globe, extending its successful and proven operating model.
Over recent years, the Group has invested in introducing and developing the Ted Baker brand in the Japanese market. To date, the Group has opened five stores in the territory to build awareness and understanding of the Ted Baker brand. Infinity intends to build on the Group's existing store portfolio, expand the concession network and invest in Ted Baker's online presence.
As part of the appointment of Infinity as its Japanese Retail Licence Partner, Ted Baker will transfer certain existing assets relating to its Japanese business (which include existing non-current stock, fixed assets and leases) to Infinity at nil value to support the successful transition of the operations. As a consequence, Ted Baker anticipates exceptional transaction related costs of approximately £4m; the costs include onerous lease expenses, restructuring charges and deal related costs. The non-cash charges of c£1m include the transfer of non-current stock and fixed assets. Current season stock is being transferred on commercial terms. It is expected that the appointment of the Licence Partner will be accretive to Group pre-tax profit* in the current financial year. The positive impact of profit will increase during the further years of the contract.
Commenting, Lindsay Page, Chief Executive Officer of Ted Baker, said:
"We are very excited about the next stage of growth for the Ted Baker brand in Japan. Over recent years, we have invested in introducing Ted Baker to Japanese customers and we are confident that our new Japanese Retail Licence Partner will build on this platform and deliver meaningful long-term growth.
In Sojitz Infinity Inc., we have an extremely capable partner that brings local market expertise to our brand alongside our already well-established design, buying and merchandising skillset. This combination will drive an acceleration in performance of the business. We firmly believe that Japan has the long-term potential to be an important market for the Ted Baker brand.
I would like to take this opportunity to thank all my colleagues who have helped establish the brand in Japan. Following our recently announced Joint Venture in China, including the Hong Kong S.A.R. and Macau S.A.R. territories, this completes the reorganisation of our Asian operations and is another step forward in our strategy to further expand Ted Baker as a truly global lifestyle brand."
Commenting, Kohei Ono, Chief Executive Officer of Sojitz Infinity Inc., said:
"We are thrilled to have the opportunity to help build and develop Ted Baker in the large and unique Japanese market. Ted Baker is a brand that we have followed since its arrival in Japan for a long time and believe it has the potential to appeal to more consumers in this market. Our knowledge and experience in building fashion brands through stores, concessions and online should add value to Ted Baker and we look forward to working together."
This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of the Company is Charles Anderson, Finance Director & Company Secretary.
Ted Baker Plc
Lindsay Page, Chief Executive Officer Tel: + 44 (0) 20 7255 4800
Charles Anderson, Finance Director & Company Secretary
Phil Clark, Commercial Director
Hudson Sandler LLP (public relations) Tel: +44 (0) 20 7796 4133
Alex Brennan / Hattie O'Reilly / Nick Moore
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Notes to Editors
Ted Baker Plc - "No Ordinary Designer Label"
Ted Baker is a global lifestyle brand distributing across five continents through its three main distribution channels: retail (including e-commerce); wholesale; and licensing.
Ted Baker has 560 stores and concessions worldwide, comprised of 201 in the UK, 122 in Europe, 130 in North America, 98 in the Middle East, Africa and Asia, and 9 in Australasia.
We offer a wide range of collections including Menswear; Womenswear; Global; Phormal; Endurance; Colour By Numbers; Accessories; Bedding; Childrenswear; Eyewear; Footwear; Fragrance and Skinwear; Gifting and Stationery; Jewellery; Lingerie and Sleepwear; Luggage; Neckwear; Rugs; Suiting; Technical Accessories; and Watches.
Based on the Group's consolidated, audited financial accounts for the year ended 26 January 2019, the value of the gross assets held in Ted Baker Japan KK was £3.6m and a loss of £2.7m was attributable to the assets.
Development of the Brand
Our strategy is to enhance our position as a global lifestyle brand by the continuous development of three main elements of our business model:
· Considered extension of the Ted Baker collections to achieve our brand growth potential. We review our collections continually to ensure we anticipate and react to trends and meet our customers' expectations. In addition, we look for opportunities to extend the breadth of our collections and enhance our offer;
· Controlled distribution through three main channels: retail (including concessions and e-commerce); wholesale; and licensing. We consider each new opportunity to ensure it is right for the brand and will deliver margin-led growth; and
· Carefully managed development of existing and new international markets. We continue to manage growth in existing territories while considering new territories for expansion.
Underlying our strategy is an emphasis on design, product quality and attention to detail, delivered by the passion, commitment and dedication of our teams, licence partners and wholesale customers.
About Sojitz Infinity
Sojitz Infinity is a fully owned subsidiary of Sojitz Corporation, a Japanese company listed on the Tokyo Stock Exchange. Sojitz Infinity has operated in Japan for over 60 years. It has strong brand building and store roll-out credentials established through its development of the McGregor brand into almost 250 locations across Japan, consisting mainly of department store concessions but also a number of outlet stores, several full price stores and eCommerce capabilities. Sojitz Infinity operates several businesses across a variety of operating models with Vesvio, Maurizio Baldassari, Serge Blanco and Vicomte A, covering a further 73 concessions.
Cautionary statement regarding forward-looking statements
This announcement contains certain forward-looking statements. These forward-looking statements include matters that are not historical facts or are statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies, and the industries in which the Group operates.
Forward-looking statements are based on the information available to the Directors at the time of preparation of this announcement, and will not be updated. The Directors can give no assurance that these expectations will prove to have been correct. Due to inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements.
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