Teb Baker’s growth fashions a profit surge

By PERRY GOURLEY
Published on 04/10/2012 19:44

TED BAKER, the fashion brand which was founded as a shirt shop in Glasgow in 1988, has continued to defy a gloomy retail sector as global expansion helped deliver another surge in sales and profits.

The group, which has 179 outlets in the UK, said retail sales were up 15.4 per cent in the 28 weeks to 11 August on the back of increased demand at existing stores and new outlets opening in London, New York and Tokyo.

The upbeat performance implies like-for-like sales growth of around 3 per cent and the high street chain, known for its classic cuts with quirky details, revealed a 10.4 per cent increase in underlying pre-tax profits to £9.4 million in the half-year period.

Total revenues rose to £118.6m from £102.8m.

Founder and chief executive Ray Kelvin said: “We have delivered good results in a challenging environment while making important investments for the long term development of the brand, including opening new stores in Tokyo and on Fifth Avenue, New York.”

The group said UK and European retail sales rose 8 per cent to £74.7m, while the US saw growth of 53 per cent to £15.9m.

Womenswear was a strong performer with sales up 24.5 per cent at £66.1m, representing 55.7 per cent of total sales, although more womenswear space was added in the period. Menswear sales were up 5.7 per cent to £52.5m.

Its wholesale division, which suppliers other retailers, grew sales by 15 per cent to £24.9m, driven by both the UK and US.

The group said the strong first-half performance had continued into the second half as the planned expansion into international markets continued.

“We are especially pleased with the positive reaction to our autumn/winter collections and I am delighted with the openings, since the period end, of our first store in China in Beijing and our first concessions in Germany as we continue to build global presence,” said Kelvin.

“As ever, our full-year results will be dependent on trading in the important second half and we remain understandably cautious at this stage given the uncertainty in the global economy.

“However, we believe that we are well placed to deal with the challenges ahead.”

In Europe, the designer plans to open more concessions in department stores across Ireland, the Netherlands and Spain.

The group announced a 10.5 per cent rise in the interim dividend to 7.9p per share.

Sanjay Vidyarthi, an analyst at Espirito Santo Investment Bank, said: “The pipeline for new stores is healthy, the balance sheet is strong and the track record for controlled growth is formidable.

“It remains one of our top picks in the sector.”

However, in the research note he also cautioned that the firm saw risks on the upside, “as Ted Baker starts to leverage the investment it has made in international growth over the next couple of years”.

In total, Ted Baker now has almost 300 stores and concessions worldwide, 220 in Europe, 47 in the US, 28 in the Middle East and Asia and four in Australasia.

Shares in the group closed up 7.5p at 921p.

The company’s market value has risen by more than 30 per cent over the past year and is now valued at almost £400m.