Ted Baker shares spike as retailer reports Covid resilience
Ted Baker shares swelled more than 10 per cent this morning, as the British fashion retailer reported a resilient balance sheet in the 11 weeks to 18 July, with strong online sales as shoppers were forced to turn to their screens during lockdown.
The lifestyle brand saw a 35 per cent increase in e-commerce sales during the period, raking in £35.2m from online orders as shops and department stores around the country remained shuttered. Online sales represented 69 per cent of total sales over the period, up from 25 per cent in 2019.
Group revenue took a 55 per cent hit to £60.9m compared to the same period last year, but the fashion brand reported net cash of £56.7m as of 11 July, ahead of management expectations due to strong cash management during the pandemic.
Shares were up 10.3 per cent to 77.9p at 09.06am, ahead of the group’s annual general meeting this morning.
It comes as the British high street staple last month launched its Formula for Growth three-year transformation plan to help it weather the coronavirus storm and deliver a more structurally profitable business.
The fashion brand will look to reduce its capital expenditure to less than £10m in 2021, against its previous guidance of £15m, in a bid to boost its cash position during the aftermath of coronavirus.
Ted Baker yesterday announced it will axe at least 500 jobs, marking more than a quarter of its UK workforce, which the company today said would help it save £15m a year.
Ted Baker’s spring/summer collection next year will be sourced from 100 suppliers, down from 150 suppliers this year, as the group looks to consolidate its negotiating power and buying efficiency.
Total retail sales fell 50 per cent over the 11 weeks, with store revenue slumping 70 per cent.
However, the group has now reopened 95 per cent of its global stores, with 75 per cent of Ted Baker stores operational over the last month.
Rachel Osborne, Ted Baker chief executive, said: ” I am pleased with the early progress we have made in driving operational excellence and cost efficiencies since the launch of Ted’s Formula for Growth in June. Our customers are engaging with the brand and responding to our Covid-19 promotional activity, as evidenced by our resilient trading over the past 11 weeks.
“Our performance is encouraging, but I caution that it is still early days, and we have a substantial amount of work to do over the next 12 months against a backdrop of significant uncertainty in the world.
“However, the brand has an exciting future, and I am looking forward with cautious optimism that the initiatives currently underway across all areas of the business will bear fruit over the next 12 months.”