The group will confirm it had a tough 2020 when it unveils full-year results on Thursday, with analysts expecting it to report an operating loss of £65.2 million, as revenue halved during the lockdown restrictions. The enforced closure of bricks-and-mortar stores and the group’s focus on occasion wear and formal clothing had a particular heavy toll on its trading last year.
The company’s results announcement has itself been disrupted by Covid-19, having been delayed by two weeks from the planned update on May 24.
It said at the time that “disruption caused by Covid on the audit processes” meant it had to push back the announcement to June.
Laura Hoy, equity analyst at Hargreaves Lansdown, said the pandemic “magnified Ted’s weakness as an already-struggling bricks-and-mortar retailer, especially because of its reliance on occasion wear”.
But as lockdown measures ease, she said the group’s update on current trading will prove whether its strategy shift is enough to breathe new life into the business.
“Top of mind will be how online sales are doing. The pandemic only accelerated a seismic shift toward online shopping, one that Ted was fairly unprepared for.
“But the level of success of the newly launched digital platform will offer an insight into how turnaround efforts are doing. We’d like to see online sales making up reasonable chunk of sales, even as lockdowns unwind.”
Ms Hoy said another key measure of the turnaround efforts will be inventory management.
“The group has been bogged down by piles of unsold inventory, which had to be discounted, and in turn weighed on margins. At the year-end, the group expects to have fully transitioned to a leaner model, with product lifecycles slashed by a third.”
In February the group warned of a Brexit bill of up to £5m as a slump in festive sales also laid bare the toll taken by the pandemic.
The group said the predicted Brexit costs came as it faces extra duty and shipping costs following the UK’s departure from the EU, which will only be “partially offset” by new customs warehouse capability.
Retail sales nearly halved in its crucial Christmas trading quarter, falling 47 per cent in the 13 weeks to January 30 as lockdowns and restrictions hit trading.
Chief executive Rachel Osborne said at the time: “While we have made encouraging strategic progress, trading over the fourth quarter was difficult and heavily impacted by the Covid pandemic, leading to the closure of many of our stores during the period and a lack of demand for outerwear and occasion wear over the festive season in particular.”
Ted Baker was founded by Ray Kelvin as a single shirt shop in Glasgow in the late 1980s and has grown into a global fashion empire.
He resigned as chief executive in 2019 following allegations of harassment that he denied.