Ted Baker PLC – Interim Results

·    Group revenue up 3.5% (5.5% in constant currency) to £306.0m

·    Retail sales including e-commerce up 1.1% (up 2.9% in constant currency) to £220.1m

·    UK and Europe retail sales up 1.0% (up 0.7% in constant currency) to £147.1m

·    North America retail sales up 1.8% (up 8.1% in constant currency) to £61.8m

·    Rest of the World retail sales down 1.8% (up 1.8% in constant currency) to £11.2m

·    E-commerce sales up 24.1% (up 25.7% in constant currency) to £53.0m

·    Planned expansion continued with:

·    Two new stores in the UK, three new stores in the US, one new store in Spain, two new outlets in Germany and one new outlet in France

·    Further concessions with leading department stores across the UK, Europe and North America

·    Licensee openings in India, Kazakhstan, Malaysia, Mexico, Singapore, Taiwan and Ukraine

·    Wholesale sales up 10.1% (up 12.8% in constant currency) to £85.9m

·    Licence income up 11.7% to £10.9m

·  Measured and controlled approach to cost saving initiatives savings due to our business model

Chairman's Statement

The first half of the year has continued to see challenging external trading conditions across many of our global markets.  In addition, performance has been impacted by unseasonable weather across the UK and Europe and North America in the early part of the year and a very hot summer across the UK and Europe. Despite this difficult backdrop, Group revenue increased by 3.5% (5.5% in constant currency¹) and profit before tax and exceptional items² increased by 3.5% to £25.0m (2017: £24.2m) for the 28 weeks ended 11 August 2018 (the “period”). Reported profit before tax decreased by 3.2% to £24.5m (2017: £25.3m).

Against the backdrop of these challenging trading conditions, retail sales (including e-commerce) increased by 1.1% to £220.1m (2.9% in constant currency¹). Our e-commerce business is an integral and increasingly important component within our retail proposition and has performed well, delivering sales growth of 24.1% (25.7% in constant currency¹). Average retail square footage increased by 5.5%. Our flexible business model, including a relatively low number of own stores, and strong brand enables us to adapt to structural changes in the retail sector.

Wholesale sales increased by 10.1% (12.8% in constant currency¹) to £85.9m with a good performance from our UK business, a strong performance from our North American business and the earlier timing of deliveries. We anticipate achieving mid to high single-digit growth (in constant currency¹) in the wholesale business for the full year.

Licence income increased by 11.7% to £10.9m as both our product and territorial licences continued to perform well. During the period, our licence partners opened further stores in India, Kazakhstan, Malaysia, Mexico, Singapore and Taiwan. We also opened our first licensed partner store and first licensed partner concession in Ukraine. There were notable performances from our product licensees in Childrenswear, Eyewear, Fragrance and Skinwear and Suiting.

We are pleased to have signed two new global licence agreements. In June, we signed a new men's underwear and loungewear global licence with Delta Galil. Since the period end, we signed a new global watch licence with Timex Group, allowing us to benefit from their expertise and long history as an authentic watchmaker. Both of these new partners reflect our commitment to working with the best product specialists that are able to support our status as a truly global lifestyle brand.

We have successfully implemented the final phase of the Microsoft Dynamics AX System across our UK and European business and, as previously stated, we remain on track to complete the final phases of this project in Asia towards the end of this financial year. This will allow us to continue to enhance our efficiency, streamline operations and support the development of the business.

In July, we commenced the transition to our new distribution facility in North America. Once fully operational, this will serve our retail, wholesale and e-commerce businesses across North America supporting our long-term growth strategy.

Since the period end, the Group entered into an agreement with Pentland Group Plc, our footwear licensee since 2001, to acquire the issued share capital of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC. Pentland currently holds the exclusive global licence to manufacture and distribute footwear under the Ted Baker brand. The aggregated sales for both companies for the year ended 31 December 2017 totalled £39.8m. Approximately 25% of these were sales to Ted Baker. The acquisition will complete on 31 December 2018 and is expected to be earnings enhancing for the year ending 25 January 2020 and beyond. This is an exciting opportunity for us to drive further growth in our footwear business, by leveraging our global footprint and infrastructure.

Current Trading and Outlook

Global markets have continued to see challenging external trading conditions which have impacted performance. In the UK, Europe and the East Coast of America, trade has also been affected by the unseasonably hot weather in September.  In addition, trading in the UK has been impacted by the well-publicised challenges facing some of our trading partners.

Our Autumn / Winter collections have been well received and we are confident that we remain well positioned to continue the brand's momentum and long term development.

Retail

In the UK and Europe, we have continued our measured and controlled expansion with our first outlet opening in Italy and further concession openings in Germany and Spain. We plan to open a new outlet in London later this year. We will continue to invest in our e-commerce sites to enhance the customer experience.

In North America, we have continued our expansion with a new store in Chicago and will continue to develop our presence with plans to open a store in San Diego later this year.

In the Rest of the World, we remain focused on building brand awareness, as we are still in the relatively early stages of investment in these markets.

Wholesale

In our wholesale business, we anticipate reporting mid to high single-digit sales growth (in constant currency¹) for the full year.

Licence Income

Our product and territorial licences continue to perform well. Since the period end, our licence partners have opened stores in Saudi Arabia and Thailand with further licence partner store openings planned in Dubai, India and Saudi Arabia. We also plan to open licence partner stores in new territories, including our first store in Kosovo.

 Outlook

We have a very clear strategy for the continued expansion of Ted Baker as a global lifestyle brand across both established and newer markets.  Our flexible business model ensures that our customers have multiple channels to engage with the brand.  Our growing e-commerce business, underpinned by stores that showcase the brand, mean that we are well positioned to deal with the structural changes in an evolving retail environment and continue Ted Baker's long-term development.

The board is mindful of the uncertainties in its markets over the second half of the year, but remains focussed on making further progress for the full year.  We intend to make our next trading update, covering the period since the start of the second half of the financial year, in early December.

David Bernstein CBE

Non-Executive Chairman

4 October 2018