Company Announcements

FULL YEAR OUTLOOK & TRADING UPDATE

Source: RNS
RNS Number : 2879W
Ted Baker PLC
10 December 2019
 

10 December 2019

               

Ted Baker Plc

("Ted Baker" or the "Group")

FULL YEAR OUTLOOK & TRADING UPDATE

  

The Board of Ted Baker plc provides the following update on trading and outlook.

 

FULL YEAR OUTLOOK

Expectations for the period ending 25th January 2020 have been reduced to a minimum profit before tax of £5m, with a potential outcome of up to £10m dependent on Christmas trading and final year-end review.

 

The Board has considered:

 

·      Trading over November and the Black Friday period was below expectations, with lower than anticipated margins and sell through.

·      An anticipation that difficult trading conditions will continue, and therefore it is appropriate to take a more cautious outlook for the remainder of the financial year, which includes the key trading months of December 2019 and January 2020.

·      Non-trading Foreign Exchange movements relating to the translation of intercompany balances will in future be reported as a non-underlying item.

 

The last 12 months has undoubtedly been the most challenging in our history, yet the Ted Baker brand remains well supported by our customers, partners and trustees and we appreciate their ongoing support.

 

We are taking the necessary immediate actions to address underperformance and improve efficiencies across the wider Group and are confident that these will return the Group to a stronger position and continue the Brand's long-term development. 

 

IMMEDIATE ACTIONS

The Board has instigated an immediate action plan to improve the performance of the Group:

 

1.     COST REVIEW: independent consultants Alix Partners have been engaged to conduct a wide-ranging review of the Group's operational efficiency, costs and our business model.

2.     ASSET REVIEW: a review of the Group's assets commenced in October and is progressing to the expected timetable.

3.     DIVIDEND SUSPENDED: While the immediate actions are being implemented the Board has determined that dividend payments will be temporarily suspended.  The Board recognises that dividend is an important part of our returns to shareholders and will look to resume payment as soon as it is appropriate to do so.

 

The Board will include progress updates on the Immediate Actions that are being implemented within its Full Year & Interim Reporting schedule.

 

TRADING UPDATE (for the 17 week period from 11 August 2019 to 7 December 2019)


Reported

Organic1


 

17 weeks to

7 December 2019

Change

Constant currency2 change

Change

Constant currency2

change

Group revenue

£203.8m

(0.3%)

(1.2%)

(3.1%)

(3.9%)

   Retail

£143.0m

(5.7%)

(6.4%)

(4.8%)

(5.5%)

   Wholesale

£60.8m

15.1%

13.7%

1.9%

0.6%

 

 

 

·    Group revenue decreased 0.3% (1.2% decrease in constant currency) to £203.8m for the 17 week period from 11 August 2019 to 7 December 2019 (the "Period"). Removing the impact of acquisitions and disposals ("organic basis"), Group revenue declined 3.1% (3.9% in constant currency). We have continued to experience challenging trading conditions in the UK as a result of weak consumer spending, macro-economic uncertainty and a backdrop of elevated promotional activity.

·    On an organic basis, total retail sales decreased 4.8% for the Period (5.5% decrease in constant currency) and average square footage rose by 5.2% to 424,916 sq.ft (2019: 403,888 sq.ft). September sales were adversely affected by unusually warm weather in the UK and Europe.

·    E-commerce sales decreased 0.7% (1.4% in constant currency) and represented 31.0% of total retail sales (2019: 29.4%). Whilst our UK and Europe performance has been impacted by the pressures detailed above, we have seen a strong performance in North America, with Ted Baker own site sales increasing 28.9% in constant currency, which reflects good progress against an important pillar of Ted Baker's international growth strategy.

·    On an organic basis, wholesale sales increased 1.9% (0.6% in constant currency). As previously noted, the increase is due to the implementation of our new monthly product drops, with sales which would have previously fallen in the first half of the year now falling within the current reporting period. We anticipate a decline in organic wholesale sales in the mid to high single-digit range (in constant currency) for the full year, reflecting the challenging trading conditions impacting both our UK and North America trustees as well as our territorial licence partners across the world.    

·    Group gross margin is below expectations due to an increase in promotional activity, following the unprecedented and sustained levels of promotional activity across the sector, and taking a more proactive approach to stock management and inventory sell through.

 

Operating Update:

·      Senior management team appointments:

Rachel Osborne as Chief Financial Officer in November 2019;

Ari Hoffman as Chief Executive Officer of North America in December 2019;

Peter Collyer as Chief People Officer joining in January 2020.

·      Creation of a joint venture in Mainland China, Hong Kong and Macau, with our first store opening (Yansha Outlet, Beijing) in November. Agreement with Sojitz Infinity Inc. completed in October, creating an exclusive retail licence for Japan, initially for five years. This completed 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.

·      New product licence agreement with Next Plc signed in August to accelerate the expansion of Ted Baker's childrenswear collections.

·      Opened three short term leases in the UK at Stratford, Lakeside and Cardiff, all with encouraging starts.

Board Changes

The company has made separate announcements regarding immediate Board changes.

 

 

This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of the Company is Peter Hearsey-Zoubie, General Counsel & Company Secretary.

 

1 The Period benefitted from incremental footwear revenue, following the acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC, which completed on 1 January 2019. This revenue would have previously fallen within licence income. On 1st October 2019 we commenced trading as a joint venture in Mainland China, Hong Kong and Macau with LongGoal and begun operating under a retail licence model in Japan with Sojitz Infinity Inc. Organic growth rates represents year on year performance excluding the impact of acquisitions or disposals.

 

2 Constant currency comparatives are obtained by applying the exchange rates that were applicable for the 17 weeks ended 8 December 2018 to the financial results in overseas subsidiaries for the 17 weeks ended 7 December 2019 to remove the impact of exchange rate fluctuations.

 




 

Hudson Sandler

Tel: +44 (0) 20 7796 4133

Alex Brennan / Hattie Dreyfus / Nick Moore


Enquiries and further information:

www.tedbaker.com

www.tedbakerplc.com

 

Media images available for download at:

www.tedbakerplc.com/ted/en/mediacentre/imagelibrary

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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