Ted Baker, the British fashion house with Scottish roots, has warned of a Beast from the East hit to its takings as it yesterday posted a jump in annual profits having shrugged off the tough trading conditions hammering rivals.
The group said unseasonable weather across the UK and Europe – as well as on the east coast of America, which is a key market for the firm – had knocked recent trading and warned over “challenging” conditions in many of its global markets.
Its annual results, however, provided a rare bit of good news from the beleaguered retail sector as the group posted a 12.3 per cent surge in pre-tax profits to £68.8 million for the year to 27 January.
Retail sales across the UK and Europe lifted 6.4 per cent with currency effects stripped out as a 34.7 per cent surge in online revenues offset ongoing pressure on its high street outlets – which suffered a 1.4 per cent fall.
Ted Baker founder and chief executive Ray Kelvin, who set up the business in 1988 with a single store in Glasgow, cheered another year of “continued progress” as the group opened more stores in the UK and internationally.
While the chain said the spring selling season had been hampered by the recent snow storms and freezing weather in Europe, it put faith in its collections to deliver another year of growth.
It told investors: “The recent unseasonal weather across Europe and the east coast of America has had an impact on the early part of trading for spring/summer and we anticipate that external trading conditions will remain challenging across many of our global markets. However, the new season collections have been well received and the strength of our brand and business model mean that we remain well positioned to continue the group’s momentum.”
Ted Baker now has 532 stores and concessions worldwide, including 195 in the UK, 113 in Europe, 127 in North America, 88 in the Middle East, Africa and Asia, and nine in Australasia. While global retail sales lifted 8.5 per cent on a constant currency basis, wholesale revenues were another bright spot, up 14.6 per cent, while licence income rose 17.6 per cent to £21.4m.
It said it expects further growth in the wholesale division, which should drive high single-digit sales growth in constant currency over the year ahead.
George Salmon, equity analyst at financial services outfit Hargreaves Lansdown, said: “The arrival of the Beast from the East in early March was untimely for clothing retailers to say the least, as it came just as they started to push spring/summer collections. While the cold snap has seen trading slow a touch, investors should nonetheless be reassured that Ted is confident this season’s lines will fly off the shelves once things warm up a bit.
“Overall, we think there’s several reasons to be optimistic about Ted’s long-term prospects. The group’s quirky designs offer high fashion at accessible prices, and thus fill an attractive niche in market. We also like the fact expansion has been well-managed, and recent years have seen Ted grow without stretching the balance sheet too much. That makes the unexpected increase in debt something of a blot on the copybook.”