Ted Baker keeps unstoppable status as e-tail and womenswear boom
There are very few companies about which we can use the word ‘unstoppable’, but Ted Baker has certainly been one of those in the last few years. So how has it fared this year in a world where fashion retail is under huge pressure? Is it still unstoppable?
It would seem so, for now. The company reported its results for the 28 weeks to August 12 on Tuesday and they show an undeniably strong business. Just look at the figures. Revenue rose 14% to £295.7 million (or 9% on an exchange rate-neutral basis) but pre-tax profit outstripped that with a 17.8% rise to £25.3 million.†Profit before tax and exceptional items was up 12.7% to £24.2m and overall retail sales including e-commerce rose 13.9% to £217.7 million (up 9.2% in constancy currencies). The retail gross margin remained constant at 65.6% as the company proved adept at shifting full-price product.
This growth came as womenswear turned in an exceptional performance. Sales rose 19.1% to £177.4 million while menswear was up 7% to £118.3 million. Womenswear also grew its shares of the Ted Baker mix, hitting 60% this time from 57.4% a year ago, which meant menswear dipped to 40%.
The company said the growth in the womenswear mix was driven by allocation of space as well as the increased proportion of e-commerce sales where it sees a higher percentage of womenswear sales.
And on the subject of e-tail. It turned in a stunning performance here. E-sales rose an impressive 43.8% to £42.7 million, and still managed to rise 40.7% currency-neutral. Online sales are now just short of 20% of its total retail turnover but in the UK and Europe that figure is closer to 24%. The company’s hailing of its omnichannel offer in this set of results was clearly justified.
Ted Baker seems to be doing well in all regions in which it operates, although exchange rate effects are clearly helping it outside of the UK and there are some challenges out there.
North American retail sales surged 18.8% to £60.7 million, but rose ‘only’ 7.8% when exchange rates were factored out of the equation. The company said sales there were affected by “higher levels of competitor promotional activity and lower international tourism.”
Asia retail sales powered ahead by 29.5% to £11.4 million, or 19.6% in constant currency, although the business there is still relatively small and so faster growth is only to be expected.
And its core UK and Europe retail ops? They saw sales 11% higher to £145.6 million, or 9.2% currency-neutral, which is a good result given the retail environment this year.
With its average retail square footage up 4.9%, the company’s sales rise was bigger than its space expansion. But while retail sales per square foot increased 3.3% overall to £437, they fell 1.5% currency-neutral. It was the one dark note in the results statement and demonstrated “changing customer behaviour with customers shopping both online and in-store.”
STORES AND WHOLESALE
But that isn’t deterring the company from opening new physical store space. It opened two new locations in the US and one new store in each of the UK, China and France during the period, as well as one new outlet store in each of the UK and the Netherlands. It also opened more concessions in department stores across the UK, Europe, and Asia and saw licensee openings in Australia, Dubai, Kuwait, Lebanon, Mexico, Qatar, Saudi Arabia and Turkey.
And even when it isn’t opening its own stores, it’s placing more of its product into other company’s locations. Ted Baker said its wholesale turnover advanced by 14.1% to £78 million in the latest half-year (10.2% currency-neutral), with its licensing income up 23.1% to £9.7 million. Wholesale did well in North America, which was good news given the challenges the retail stores are facing there.
So what did founder and CEO Ray Kelvin have to say about all this? He was upbeat and even bullish, but also sounded a note of caution: “The brand has continued to perform well and in line with our expectations across all distribution channels. We have a clear strategy for the development of the brand across both established and newer markets. We are dedicated to the long-term development of the Ted Baker brand and are continuing to invest to support our future growth. Whilst trading conditions in some of our markets remain challenging, we are confident of making further progress for the full year, in line with our expectations.”
The company has 511 stores, concession and outlets globally with 192 of them in the UK, 108 in Europe, 119 in North America, 82 in the Middle East, Asia and Africa and 10 in Australasia.
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