Upmarket fashion retailer Ted Baker defied the doom and gloom on the high street by posting a set of strong results, but warned that cold weather across Europe and North America hit sales of its spring-summer collection.
The retailer, which has fans including Kate Middleton and Amal Clooney, posted a 12 per cent rise in pre-tax profits to £68.8million for the year to January 27.
Group sales rose 11.4 per cent to £591.7million, with retail sales in UK and Europe up 7.7 per cent to £301.1million – a strong level of growth compared to high street rivals.
Cold weather: Ted Baker said the Beast from the East has hit spring and summer sales
Much of the growth in the UK and Europe came from online sales, which rose 34.7 per cent, offsetting a 1.4 per cent fall in store sales and helping group online sales rising by nearly 40 per cent to £149.2million.
The fashion firm did well in the US and Canada too, with retail sales there rising by 16.2 per cent to £120.1million in the full-year.
However the firm, which has 532 stores and concessions worldwide, including 195 in the UK, warned that ‘external trading conditions’ will remain ‘challenging’ across many of its global markets.
Shares in Ted Baker fell 4.6 per cent, or 136p, to 2800p in morning trading, as investors were left unimpressed by the rise in sales.
‘The recent unseasonal weather across Europe and the East Coast of America has had an impact on the early part of trading for Spring/Summer and we anticipate that external trading conditions will remain challenging across many of our global markets,’ the group said.
‘However, the new season collections have been well received and the strength of our brand and business model mean that we remain well positioned to continue the Group’s momentum and long-term development.’
The brand was founded in 1987 in Glasgow by Ray Kelvin, who is also chief executive and has put its success down to cautious expansion and not trying too hard.
Today Kelvin cheered another year of ‘continued progress’ as the group opened more stores in the UK and internationally, including in Kuwait, Qatar, Malaysia, Mexico and India.
In the UK and Europe, the company opened a new store in London Luton Airport and said it plans to open new stores in Barcelona Airport and London Bridge station, an outlet in Lyon and its first outlet in Neumunster, Germany, along with further concessions in the UK, France, Germany and Spain.
It also said it will continue to invest in its e-commerce sites to ‘enhance the customer experience’.
Fashion chain Ted Baker has warned over a Beast from the East hit to spring sales
Views from the City
Neil Wilson, senior market analyst at ETX Capital, noted that, despite strong sales, the pace of growth had tailed off in the major markets.
He said: ‘North America sales growth was 16.2 per cent, versus 28.3 per cent in the prior year. UK and Europe sales growth slowed from 10.7 per cent to 7.7 per cent.’
And added: ‘Meanwhile, guidance suggests a trickier start to the year than the market previously had expected and is weighing on the stock. Combination of these factors maybe indicates some headwinds to earnings growth.
‘The decline in the share price this morning so far takes the stock back to where it was before the Jan 10th trading update as hopes of a momentum build following last year’s good performance seem to have vanished along with the spring weather.
‘Notwithstanding the slightly downbeat language, these are very good results and with double-digit sales growth, it’s maybe not all doom and gloom on the high street. But although UK accounts for lion’s share of sales, Ted Baker is no yardstick for UK retail as this is increasingly a global brand rather than a pure British high shop.’
Mike van Dulken, head of research at Accendo Markets, said: ‘As with many other retailers (and indeed corporates) of late […] it has fallen foul of its outlook statement, with management anticipating trading conditions will remain challenging across many of its global markets.
‘More cautious investors are clearly not prepared to look through this observation, for fear of it actually sugar-coating what could be a worsening in recent trading conditions. After all, the message from the high street this week was hardly one of optimism.
‘And as much as growth levels are handsome double-digits (retail, wholesale, internet and licensing), there also a worry that GBP’s recent climb is eroding what has been a rather helpful FX boost.’