Profit before tax is now expected to be in the region of £63m; this is before previously announced costs associated with the ongoing independent external investigation, exceptional costs relating to the previously announced debtor balances owed by House of Fraser and the acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC and other non-cash impairments relating to retail assets. The net borrowing position for Year 18/19 remains in line with prior expectations.
Pre-tax profit for the Year 18/19 has been adversely affected by three non-cash impacts:
1. Foreign exchange movements in the final week of the financial year, primarily GBP/USD and GBP/EUR, have resulted in a mark-to-market profit impact of approximately £2.5m relating to the translation of inter-company balances;
2. As previously reported, we have upgraded our systems and made process enhancements during the year. These systems upgrades have allowed us to identify additional product costs of approximately £2.5m that arose during the second half of Year 18/19. We are confident the systems upgrade now provides robust controls to prevent a recurrence; and
3. The recent systems and warehousing transitions in Asia and the US, as well as a more prudent view on aged stock, have resulted in an unanticipated write-down in the value of inventory of approximately £5m. Ted Baker remains fully committed to driving improvements in the net working capital to sales ratio and will provide an update at the full-year results presentation.
Ted Baker will announce its full year results on 21 March 2019.