This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/2019/jun/11/ted-baker-warns-profits-amid-extremely-difficult-conditions
The article has changed 6 times. There is an RSS feed of changes available.
| Version 4 | Version 5 |
|---|---|
| Ted Baker warns on profits amid ‘extremely difficult’ conditions | Ted Baker warns on profits amid ‘extremely difficult’ conditions |
| (5 months later) | |
| More than £170m was wiped off the value of Ted Baker on Tuesday after the retailer blamed its second profit warning in four months on torrid high street trading conditions. | More than £170m was wiped off the value of Ted Baker on Tuesday after the retailer blamed its second profit warning in four months on torrid high street trading conditions. |
| The profit alert came as the brand distances itself from its founder and former chief executive Ray Kelvin, who stepped down in March following allegations he had acted inappropriately towards staff, subjecting them to “forced hugs” and ear kissing. | The profit alert came as the brand distances itself from its founder and former chief executive Ray Kelvin, who stepped down in March following allegations he had acted inappropriately towards staff, subjecting them to “forced hugs” and ear kissing. |
| Lindsay Page, the company’s longstanding finance chief who was promoted to the top job in April, admitted being “off our game” with some its spring clothing but said the weather and price cuts by rivals had proved bigger problems: “Some brands launched their spring/summer collections in February at a discount. We are not immune to that. We have to balance the integrity of the brand with the wider market volatility.” | Lindsay Page, the company’s longstanding finance chief who was promoted to the top job in April, admitted being “off our game” with some its spring clothing but said the weather and price cuts by rivals had proved bigger problems: “Some brands launched their spring/summer collections in February at a discount. We are not immune to that. We have to balance the integrity of the brand with the wider market volatility.” |
| Ted Baker now expects underlying pretax profits to come in between £50m and £60m for the year to January 2020. Analysts had initially expected profits of about £70m. The retailer had previously warned on profits in February. | Ted Baker now expects underlying pretax profits to come in between £50m and £60m for the year to January 2020. Analysts had initially expected profits of about £70m. The retailer had previously warned on profits in February. |
| The update came as rival fashion chain Quiz also blamed the high street downturn for wiping out annual profits. The struggling Scottish chain, which issued three profit warnings in the last six months of the year to 31 March, made a pretax profit of just £200,000 on sales of £131m, down from £8.5m a year ago. | The update came as rival fashion chain Quiz also blamed the high street downturn for wiping out annual profits. The struggling Scottish chain, which issued three profit warnings in the last six months of the year to 31 March, made a pretax profit of just £200,000 on sales of £131m, down from £8.5m a year ago. |
| The Quiz chief executive, Tarak Ramzan, said its stores were struggling as fewer shoppers were visiting the high street while a high volume of returns had weighed on the success of its website. “We were chasing the Instagram customer too much,” Ramzan said. | The Quiz chief executive, Tarak Ramzan, said its stores were struggling as fewer shoppers were visiting the high street while a high volume of returns had weighed on the success of its website. “We were chasing the Instagram customer too much,” Ramzan said. |
| Quiz floated on the stock exchange at 161p a share in July 2017 but its troubles have triggered a share price collapse. Tuesday’s update sent them down again, by a fifth, to 21.9p. As part of a turnaround plan Quiz is closing 20 of its 174 department concessions and says it will also look to close or cut the rents on some of its 73 UK stores. | Quiz floated on the stock exchange at 161p a share in July 2017 but its troubles have triggered a share price collapse. Tuesday’s update sent them down again, by a fifth, to 21.9p. As part of a turnaround plan Quiz is closing 20 of its 174 department concessions and says it will also look to close or cut the rents on some of its 73 UK stores. |
| The Ted Baker profit warning sent its shares down 29% to 954p. The company has halved in value this year but Page insisted that even if Kelvin, who founded Ted Baker in Glasgow in 1987, were still in charge it would be the “same conversation”. | The Ted Baker profit warning sent its shares down 29% to 954p. The company has halved in value this year but Page insisted that even if Kelvin, who founded Ted Baker in Glasgow in 1987, were still in charge it would be the “same conversation”. |
| Physical retailers have been hit by a combination of changing habits, rising costs and broader economic problems as well as unseasonable weather. In the past few years names such as Mothercare, Karen Millen, Toys R Us, Maplin and Poundworld have disappeared from the UK high street as a result. | |
| In terms of habits, shoppers are switching to buying online. Companies such as Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores. | |
| At the same time, there is a move away from buying "stuff" as more people live in smaller homes and rent rather than buy. Uncertainty about the economy has also slowed the housing market and linked makeovers of homes. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit, have coincided with economic and political uncertainty that has dampened consumer confidence. | |
| Retailers with a high street presence want the government to change business rates to even up the tax burden with online players and to adapt more quickly to the rapidly changing market. They also want more political certainty as the potential for a no-deal Brexit means some are not only incurring additional costs for stockpiling goods but are unsure about the impact of tariffs at the end of this year. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges, which they say put off shoppers. | |
| In the December 2019 Queen's speech, the government announced plans for further reform of business rates including more frequent revaluations and increasing the discount for small retailers, pubs, cinemas and music venues to 50% from one-third. It has also set up a £675m "future high streets fund" under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas. | |
| Some retailers could go under. Weakened by a difficult Christmas – which accounts for the entire annual profits of many retailers, and with further potential Brexit wobbles to come – retailers are facing another tough year in 2020. The latest rise in the national minimum wage in April will also add to costs and hit profits. On the plus side, there are hopes of a boost to the housing market from increased certainty about Brexit after the general election. There are also signs that the shift to online shopping is slowing, potentially easing the pressure on high streets. | |
| Sarah Butler | |
| Figures from the Office for National Statistics showed that 79,000 retail jobs were lost in the first quarter of 2019, compared with the previous quarter, as chains close stores against a backdrop of rising costs and a shift to online shopping. | Figures from the Office for National Statistics showed that 79,000 retail jobs were lost in the first quarter of 2019, compared with the previous quarter, as chains close stores against a backdrop of rising costs and a shift to online shopping. |
| “It has been a turbulent year, with many well-known brands disappearing from our high streets, as has been evidenced by the substantial loss in retail jobs this quarter,” said Kyle Monk, the head of retail insight at the British Retail Consortium. “Political and economic uncertainty has compounded many of the challenges created by the pace of technological change.” | “It has been a turbulent year, with many well-known brands disappearing from our high streets, as has been evidenced by the substantial loss in retail jobs this quarter,” said Kyle Monk, the head of retail insight at the British Retail Consortium. “Political and economic uncertainty has compounded many of the challenges created by the pace of technological change.” |
| John Stevenson, an analyst at stockbroker Peel Hunt, said the scale of the profit warning at Ted Baker would “raise eyebrows”. | John Stevenson, an analyst at stockbroker Peel Hunt, said the scale of the profit warning at Ted Baker would “raise eyebrows”. |
| He said: “While these issues have been brewing for some time – and the ranges were designed well over 12 months ago – there will be questions around founder Ray Kelvin’s departure and the wider question of how to get Ted back on point.” | He said: “While these issues have been brewing for some time – and the ranges were designed well over 12 months ago – there will be questions around founder Ray Kelvin’s departure and the wider question of how to get Ted back on point.” |
| Ted Baker has embarked on a major efficiency drive and has also launched a number of product initiatives, including introducing more fast fashion. It also plans to bolster its design teams with new hires. | Ted Baker has embarked on a major efficiency drive and has also launched a number of product initiatives, including introducing more fast fashion. It also plans to bolster its design teams with new hires. |
| The profit warning coincided with Ted Baker’s spartanly attended annual shareholder meeting, where the board received little scrutiny over the Kelvin affair. The Ted Baker chairman, David Bernstein, told shareholders the founder, who remains the company’s biggest shareholder with a 35% stake, was no longer involved in running the company. | The profit warning coincided with Ted Baker’s spartanly attended annual shareholder meeting, where the board received little scrutiny over the Kelvin affair. The Ted Baker chairman, David Bernstein, told shareholders the founder, who remains the company’s biggest shareholder with a 35% stake, was no longer involved in running the company. |
| Ted Baker did not publish the findings of an investigation into Kelvin’s conduct but Bernstein said it had strengthened its HR procedures which were “not strong enough”, including recruiting the former B&Q HR boss Helena Feltham to the board. | Ted Baker did not publish the findings of an investigation into Kelvin’s conduct but Bernstein said it had strengthened its HR procedures which were “not strong enough”, including recruiting the former B&Q HR boss Helena Feltham to the board. |
| “There is definitely no crisis,” said Bernstein. “The company is strong and the brand is strong. Any business in difficult times has to focus on the basics and we will continue with the cost-savings. I’m very confident in the essence of the brand and that we will pull out of this – and hopefully quickly.” | “There is definitely no crisis,” said Bernstein. “The company is strong and the brand is strong. Any business in difficult times has to focus on the basics and we will continue with the cost-savings. I’m very confident in the essence of the brand and that we will pull out of this – and hopefully quickly.” |
| Ted Baker | Ted Baker |
| Retail industry | Retail industry |
| Job losses | Job losses |
| news | news |
| Share on Facebook | Share on Facebook |
| Share on Twitter | Share on Twitter |
| Share via Email | Share via Email |
| Share on LinkedIn | Share on LinkedIn |
| Share on Pinterest | Share on Pinterest |
| Share on WhatsApp | Share on WhatsApp |
| Share on Messenger | Share on Messenger |
| Reuse this content | Reuse this content |