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Ted Baker warns on profits amid 'extremely difficult' conditions Ted Baker warns on profits amid 'extremely difficult' conditions
(about 3 hours later)
Ted Baker shares plunged by nearly 30% after the retailer warned on profits, saying that tough competition and falling consumer spending could knock up to £20m from earnings this year.Ted Baker shares plunged by nearly 30% after the retailer warned on profits, saying that tough competition and falling consumer spending could knock up to £20m from earnings this year.
The warning comes as the brand distances itself from its founder and former chief executive Ray Kelvin, who stepped down in March following allegations he acted inappropriately towards staff, subjecting them to “forced hugs” and ear kissing.The warning comes as the brand distances itself from its founder and former chief executive Ray Kelvin, who stepped down in March following allegations he acted inappropriately towards staff, subjecting them to “forced hugs” and ear kissing.
The company said on Tuesday it expects underlying pretax profits to come in between £50m and £60m for the year to January 2020. Analysts had expected profits of about £70m. Ted Baker said on Tuesday it expects underlying pretax profits to come in between £50m and £60m for the year to January 2020. Analysts had expected profits of about £70m.
It is the retailer’s second profits warning this year – in February it said profits for the year ended January 1019 would be about £10m lower than expected, mostly due to writing off the value of unsold clothes. It is the retailer’s second profit warning this year – in February it said profits for the year ended January 1019 would be about £10m lower than expected, mostly due to writing off the value of unsold clothes.
“Ongoing consumer uncertainty in a number of key markets and elevated levels of promotional activity across our global markets have resulted in extremely difficult trading conditions during the financial year to date,” the company said in a trading update. The update came as rival fashion chain Quiz blamed challenging trading conditions for wiping out annual profits. The struggling Scottish chain, which issued three profit warnings in last six months of the year to 31 March, made a pretax profit of just £0.2m on sales of £131m, down from £8.5m a year ago.
Shares in the group tumbled 29% to 950p after the profits warning. Quiz raised more than £100m from investors when listed at 161p a share in July 2017 but its troubles have triggered a share price collapse. Tuesday’s update sent them down again, by more than a quarter, to 20.5p.
The board does not expect trading conditions to improve throughout the year, and said current profit guidance will partly rest on new product launches and planned cost cuts across its supply chain. Shares in Ted Baker were also sharply lower, tumbling by 29% to 950p after its profits warning.
The group said trading had been affected by unseasonable weather in North America, which accounts for a third of its annual sales. It added: “Ongoing consumer uncertainty in a number of key markets and elevated levels of promotional activity across our global markets have resulted in extremely difficult trading conditions during the financial year to date.”
The board does not expect trading conditions to improve this year, and said current profit guidance will partly rest on new product launches and planned cost cuts across its supply chain.
Ted Baker made no mention of Kelvin in its trading update but hailed the strength of its brand ahead of its annual shareholder meeting in London on Tuesday.Ted Baker made no mention of Kelvin in its trading update but hailed the strength of its brand ahead of its annual shareholder meeting in London on Tuesday.
Its chief executive, Linsday Page, said: “Ted Baker remains an outstanding brand and, underpinned by the strength of our flexible business model, including a relatively low number of own stores that showcase the brand, we remain confident in our long-term growth prospects.”Its chief executive, Linsday Page, said: “Ted Baker remains an outstanding brand and, underpinned by the strength of our flexible business model, including a relatively low number of own stores that showcase the brand, we remain confident in our long-term growth prospects.”
Page said the company was committed to global expansion and is well positioned to adapt to changes across the retail sector.Page said the company was committed to global expansion and is well positioned to adapt to changes across the retail sector.
“As a team, we are proactively addressing the challenges we face as an industry. Several of our new product initiatives will commence imminently and we are confident in our collections for the coming season. We are relentlessly focused on achieving cost efficiencies as well as further cost savings throughout the business.”“As a team, we are proactively addressing the challenges we face as an industry. Several of our new product initiatives will commence imminently and we are confident in our collections for the coming season. We are relentlessly focused on achieving cost efficiencies as well as further cost savings throughout the business.”
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