Ted Baker Plc – Final Results 2021

Ted Baker Plc

(“Ted Baker”, the “Group”)

Preliminary Results Announcement for the 53 weeks ended 30 January 2021

Strategic progress and increasing brand strength position the business for future success

Rachel Osborne, Chief Executive Officer, commented:  

“We are making good progress against our strategic transformation plan and Ted Baker is increasingly well placed to take advantage of the significant growth opportunities ahead of us. The Ted Baker brand has strengthened further, with the number of active customers growing to 1.2m by the end of the year.

“While the impact of COVID-19 is clear in our results and has amplified some of the legacy issues impacting the business, Ted Baker has responded proactively and is in a much stronger place than it was a year ago. During the period, we delivered robust cashflow generation, fixed our balance sheet, refreshed our senior leadership team and today we are upgrading our financial targets for the second time since outlining our new strategy last summer.

Additionally, we have made good progress with our sustainability strategy, Fashioning a Better Future, including the mapping of all of our factory partners within our supply chain and significantly increasing our usage of cotton from sustainable sources to 69%.

“We are a year into Ted Baker's transformation plan and continue to believe that we have the right strategy and team in place to set the business up for a stronger, more sustainable future.”

Notes:  (1) Details of the restatement are included in the annual report and accounts

(2) Before non-underlying items

(3) Declared and paid

Financial Summary

• This year was a 53-week year and the extra week added 2% to sales.  Throughout this document, unless otherwise stated, we will compare sales and profit in the 53 weeks to January 2021 with the 52 weeks in the prior year. Due to the level of disruption in the year, we do not believe comparison on a 52-week basis would be helpful.
• Group revenue down 44.2% (down 44.1% in constant currency) to £352.0m compared to £630.5m in the prior year, driven by the ongoing impact of COVID restrictions on trading globally.
• Underlying loss before tax of £59.2m, primarily driven by lower revenue levels, and partially offset by our cost actions
• Retail sales including eCommerce down 42.2% (down 42.1% in constant currency) to £254.3m, compared to £439.9m in the prior year.
• ECommerce sales up 22.0% (up 22.1% in constant currency) to £144.9m, compared to £118.7m in the prior year, supported by continued investment in our digital business and significant improvements to our customer journey.  Growth in our directly operated eCommerce channels of 30.2%.
• Wholesale sales down 50.3% (down 48.6% in constant currency) to £85.3m, compared to £171.5m in the prior year, reflecting market pressure on our Trustees.
• Improvement in net cash of £ 193.8m, which exceeds the net proceeds of the equity raise and disposal of the UBB building, representing positive free cash flow generation
• Net cash of £66.7m at 30 January 2021, well ahead of management's expectations
• Upgrade of financial target.  We now expect a net cash position at YE2023.
• Renewed Revolving Credit Facility (RCF). The Group has ongoing support from our four existing lending banks, with its facilities extended from August 2022 to November 2023, with a £90m facility until January 2022 and then £80m until November 2023, including a new set of covenants.

Operational and strategic highlights

In June 2020 we launched our three-year strategic transformation programme, Ted's Growth Formula. Our progress in executing this plan has been encouraging, despite several of the legacy issues facing the business having been amplified by COVID.  Alongside a rapid and effective response to the pandemic, the foundations of our business are now fixed, and we are switching our focus to growth.  Key highlights for the period include:

• Brand strength enhanced. The Ted Baker brand remains healthy, notwithstanding the impact of extensive store closures during the pandemic lockdown period. Customers have responded positively to our refreshed social media, campaign imagery and new product. NPS increased during the period and we have 1.2m active digital customers.
• Excellent cash flow management embedded into business. The business has demonstrated cashflow discipline throughout the period, with a tight grip on working capital and the implementation of a new commercial stock cycle.
• Significant cost action taken. The Group commenced a full cost review at the start of the year, which increased in scope and scale during COVID, with £31m of annualised payroll savings and £8m of negotiated rent savings during the year
• China JV delivered strong growth in first full year of operation.   Our Chinese business grew 6% during the year, despite the store closures during Q1. Growth was robust in both stores and online and we have a healthy pipeline of new stores in the year ahead. Q1 2022 has seen growth of 262% vs. prior year and 47% growth vs. Q1 2020.

These strong foundations have supported our further progress across the three core pillars of our strategy, which are designed to deliver a structurally more profitable business with higher ROCE and higher sustainable free cash flow generation.