Difficult trading period with ongoing external challenges impacting performance
Current outlook and profit guidance
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 anticipates some of these external factors will continue to impact trade for the Group and its trading partners across the remainder of the financial year. As a result, at this early stage in the year, the Group now anticipates underlying profit before tax1for the year ending 25 January 2020 to be in the range of £50m to £60m. This reflects the Board's view of anticipated trading for the rest of the year, the positive impact of new product initiatives and planned cost efficiencies.
Ted Baker intends to announce its interim results for the 28 weeks ending 10 August 2019 in early October 2019.
Trading update
Ted Baker announces a 3.8% (1.9% in constant currency) increase in Group revenue for the 19 week period from 27 January 2019 to 8 June 2019 (the “Period”), compared to the same period last year. The performance reflects difficult and unpredictable trading conditions, unseasonable weather experienced across North America in the early part of the Period and the highly promotional retail environment across our global markets. We also experienced some challenges with our Spring/Summer collections and these have been appropriately addressed.
Total retail sales including e-commerce decreased by 0.3% for the Period (1.8% decrease in constant currency) and average retail square footage rose by 5.3% to 443,036 sq.ft (2019: 420,779 sq.ft). E-commerce sales increased by 2.4% (1.2% in constant currency) and represented 26.0% of total retail sales (2019: 25.3%).
Wholesale sales for the Period increased 14.2% (11.4% in constant currency).
The Period benefitted from incremental footwear revenue, following the acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC, which completed on 1 January 2019. The table below sets out the sales performance both including the incremental revenue from the acquisition and on a comparable basis.
|
|
Including acquisition revenue |
On a comparable basis |
||
|
|
Reported |
Constant Currency |
Reported |
Constant Currency |
|
Retail |
(0.3%) |
(1.8%) |
(1.1%) |
(2.6%) |
|
Wholesale |
14.2% |
11.4% |
(1.2%) |
(3.6%) |
|
Group |
3.8% |
1.9% |
(1.1%) |
(2.9%) |
As a result of the highly promotional retail environment both retail and wholesale gross margins are lower than last year.
In light of the challenging start to the financial year, management are actively focused on product initiatives and cost control. Monthly product drops and speed to market projects will commence in the coming weeks. Furthermore, we are driving further efficiencies through our sourcing and supply chain, as well as our ongoing focus on net working capital initiatives.
Commenting on trading, Lindsay Page, Chief Executive Officer 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.
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.
We remain committed to the long-term development and expansion of Ted Baker as a global lifestyle brand. Over recent years, we have made a number of significant investments to ensure that the Group is well positioned to continue to adapt to structural changes in the retail sector.”