(Alliance News) - The executive chair and chief executive of Ted Baker both are out immediately, as the fashion store chain on Tuesday issued a profit warning and decided to suspend its payout to shareholders.
The once-high-flying retailer downgraded its annual pretax profit guidance to a minimum GBP5 million and a maximum of GBP10 million. For the year ended this past January 26, the company had posted pretax profit of GBP50.9 million.
Ted Baker said trading over November and the Black Friday sales event period was below expectations, with lower-than-anticipated margins and sell through. Further, the company expects the difficult trading conditions to continue, and therefore it is taking a more cautious outlook for the remainder of the financial year.
Ted Baker is conducting a cost review in a bid to improve its efficiency and has temporarily suspended its dividend. The company said it will look to resume payment as soon as it is "appropriate to do so".
Ted Baker said CEO Lindsay Page has resigned with immediate effect, and Chief Financial Officer Rachel Osborne has become acting CEO with immediate effect. In addition, David Bernstein has stepped down as executive chair and Non-Executive Director Sharon Baylay has become acting chair. The company said it looking for a replacement for Bernstein.
Ted Baker shares were down 30% at the open Tuesday at 280.35 pence. The stock started 2019 at 1,571.00p.
Tuesday's dramatic announcements are the latest calamity to hit Ted Baker.
Last week it said it had overstated the value of its stock by GBP25 million but reassured that any adjustment to inventory would have "no cash impact and will relate to prior years".
Its founder, Ray Kelvin, resigned as chief executive earlier this year after allegations of misconduct were made against him. Kelvin took a voluntary leave of absence from his role as chief executive of Ted Baker in December last year, after he was accused by the company's staff of forced "hugging" and inappropriate touching and comments.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 7,212.26
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Hang Seng: down 0.1% at 26,473.42
Nikkei 225: closed down 0.1% at 23,410.19
DJIA: closed down 105.46 points, 0.4%, at 27,909.60
S&P 500: closed down 0.3% at 3,135.96
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GBP: flat at USD1.3155 (USD1.3154)
EUR: flat at USD1.1071 (USD1.1070)
Gold: firm at USD1,462.79 per ounce (USD1,460.80)
Oil (Brent): soft at USD64.12 a barrel (USD64.20)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
US Federal Open Market Committee begins two-day meeting.
0930 GMT UK trade
0930 GMT UK monthly GDP estimates
0930 GMT UK indices of production and services
1230 GMT UK NIESR monthly GDP tracker
1100 CET Germany ZEW indicator of economic sentiment
0600 EST US NFIB index of small business optimism
0855 EST US Johnson Redbook retail sales index
1630 EST US API weekly statistical bulletin
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UK Prime Minister Boris Johnson has said he is "looking at" abolishing the BBC licence fee. Ahead of Thursday's UK general election, Johnson said Monday that while the Tories were currently "not planning to get rid of all TV licence fees", the current system "bears reflection".
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An annual Gulf summit will be held on Tuesday in the Saudi capital Riyadh amid recent efforts to end a Gulf crisis between a Saudi-led bloc and Qatar. The summit brings together leaders of the six countries of the US-allied Gulf Cooperation Council: Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, Oman and Qatar. This year's meeting comes after Qatar confirmed it had recently held talks with Saudi Arabia in a bid to end a Gulf rift, describing the negotiations as progress after more than two years of stalemate. The row began in June 2017 when Saudi Arabia, the UAE, Bahrain and Egypt severed ties with Qatar, accusing it of supporting and funding terrorists, a charge that Doha denied.
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Tales of heroism, devastation and horrifying injuries emerged Tuesday after New Zealand's smouldering White Island volcano exploded, killing an estimated 13 people. Prime Minister Jacinda Ardern said five people had died and eight more were presumed dead after Monday's eruption, while dozens of injured had been airlifted to hospitals across the country. Among the 47 people caught on the island during the sudden eruption were tourists from Australia, the US, Britain, China, Germany and Malaysia, as well as local tour guides. Amid questions over why tourists were allowed to visit the volcano, police announced a criminal investigation into the circumstances of the deaths and injuries.
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BROKER RATING CHANGES
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BERENBERG RAISES OCADO TO 'BUY' ('HOLD') - TARGET 1635 (876) PENCE
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GOLDMAN CUTS SEGRO TO 'NEUTRAL' ('BUY') - TARGET 855 PENCE
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BARCLAYS CUTS SHAFTESBURY TO 'UNDERWEIGHT' (EQUALWEIGHT) - TARGET 740 (800) PENCE
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COMPANIES - FTSE 100
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Ashtead Group reported a rise in interim earnings supported by another strong performance from its North American business. For the half year ended October 31, revenue rose 19% to GBP2.68 billion from GBP2.25 billion last year, and pretax profit was up 8.2% to GBP675 million from GBP610 million the year before. In the US, where the company generates a bulk of its earnings from its Sunbelt unit, revenue came in at USD2.89 billion, up from USD2.50 billion last year. Ashtead raised its interim dividend 10% to 7.15 pence from 6.50p last year. "Our business continues to perform well in supportive North American end markets, while we have taken decisive strategic action to refocus our UK business in the challenging market conditions. Thus, except for the UK and a currency headwind, we expect results to be in line with our expectations and the Board continues to look to the medium term with confidence," Chief Executive Officer Brendan Hogan said.
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Just Eat rejected the revised 740 pence per share takeover offer from Prosus saying it "significantly undervalues" the company. The board of Just Eat unanimously recommended that Just Eat Shareholders accept the offer from Takeaway.com. "Just Eat is a leading, strategic asset in the food delivery sector and the board of Just Eat continues to believe that the Prosus offer fails to reflect appropriately the quality of Just Eat and its attractive assets and prospects, the benefits of first mover advantage in a consolidating sector, and, on the basis of its own analysis, the future upside available to Just Eat shareholders through remaining invested in Just Eat and the Takeaway.com combination," Just Eat said.
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Energy provider SSE said it welcomed the UK Competition & Markets Authority's decision to clear the proposed sale its SSE Energy Services business to OVO Group. The sale is expected to complete around mid-January 2020. Ovo is paying GBP400 million in cash and GBP100 million of loan notes. The retail arm provides energy to UK householders, under brands such as SSE, SSE Scottish Hydro, SSE Southern Electric, and SSE Swalec. "Completion of the transaction will give SSE plc even sharper focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions. We have a clear strategy around developing, operating and owning renewable energy and electricity network assets, along with growing businesses complementary to this core," said SSE CEO Alistair Phillips-Davies.
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Kantar said UK supermarket sales growth slowed to 0.5% in the 12 weeks To December 1. It said Tesco's UK market share slipped to 27.3% from 27.6%, while Sainsbury's fell to 15.7% from 16.0%.
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COMPANIES - INTERNATIONAL
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France's Sanofi is to focus on both Dupixent and vaccines, it said, as it lays out a new strategy for future growth. Dupixent is used for the treatment of skin conditions such as eczema and atopic dermatitis. Sanofi expects "strong" growth from the drug, and the ultimate aim is to achieve over EUR10 billion in peak sales. Paris-based Sanofi forecasts mid-to-high single-digit net sales compound annual growth in vaccines between 2018 and 2025, the company continued, through both existing and new products. Two areas where Sanofi will not be focusing are diabetes and cardiovascular conditions, with research to be discontinued. Epfeglenatide, a proposed diabetes treatment, now will not be launched.
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Networking hardware firm Cisco Systems declared a 35 US cent quarterly dividend ahead of Tuesday's annual general meeting. Cisco, based in San Jose, California, kept the quarterly payout flat on the previous quarter. Back in mid-November, the company reported figures for the financial first quarter ended October 26 showing a 0.7% rise in revenue to USD13.16 billion. Earnings per share was down 12% to USD0.69. Cisco Chief Executive Kelly Kramer said at the time it had been a good quarter for Cisco, with margins and earnings "strong".
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Google-owner Alphabet announced the appointment of Nobel Prize winner Frances Arnold to its board. Arnold won the Nobel Prize for chemistry in 2018 for her work on enzymes. She currently works at the California Institute of Technology, with her appointment at Alphabet effective immediately.
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Tuesday's Shareholder Meetings
Bellway
Upland Resources
Crossword Cybersecurity (re changing borrowing limits)
Gattaca
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By Tom Waite; thomaslwaite@alliancenews.com
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