TED.L Share News (TED)

(Sharecast News) - Fashion retailer Ted Baker posted a slump in revenue on Tuesday as it continued to feel the effects of the coronavirus pandemic, but online sales surged.
In the 11 weeks to 18 July, group revenue slid 55% to £60.9m, with retail revenue down 50% to £51m and store revenue 79% lower £15.8m. E-commerce sales were the only bright spot, up 34% to £35.2m.

Still, Ted Baker said overall trading has been ahead of the base case scenario given in its preliminary results last month, which included an 83% decline in store revenue.

Online trading in particular has been "significantly ahead" of expectations, it said, as it continues to benefit from a customer shift online and the uninterrupted operations of its global distribution centres. Online sales represented 69% of total retail sales, up from 25% last year.

Ted Baker began a controlled re-opening of stores across Europe, North America and the UK on 29 April following the lockdowns imposed in March. As at 18 July, 95% of its store estate was open globally, and 75% of stores have been operational for the last four weeks. Like-for-like store sales were down 50% versus last year for the last four weeks of the trading period.

The retailer said it has a strong balance sheet, with net cash of £56.7m as at 11 July, ahead of management expectations.

Chief executive officer Rachel Osborne said: "Our customers are engaging with the brand and responding to our Covid-19 promotional activity, as evidenced by our resilient trading over the past 11 weeks.

"Our performance is encouraging, but I caution that it is still early days, and we have a substantial amount of work to do over the next 12 months against a backdrop of significant uncertainty in the world. However, the brand has an exciting future, and I am looking forward with cautious optimism that the initiatives currently underway across all areas of the business will bear fruit over the next 12 months."

Ted Baker confirmed on Monday that it would cut around a quarter of its UK workforce as it looks to weather the impact of the pandemic. This followed reports over the weekend suggesting it was planning to cut 500 jobs across its retail operations and HQ.

According to The Sunday Times, around 200 jobs will be cut at the London HQ and the rest from its physical retail business.

The company said in its update on Tuesday that job cuts and initiatives across central functions and the retail store estate in the UK and North America are now expected to result in £12m of cost savings in the current financial year and £27m on an annualised basis.

At 0920 BST, the shares were up 10% at 77.70p.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "A huge increase in online sales is an unexpected piece of positivity. There were concerns Ted's higher price tags would have priced it out of the lockdown online shopping sprees, after all why spend big on an outfit no one was going to see? In an ideal world the group will be able to harness this digital surge to propel growth in the future, but this isn't guaranteed. As the economic forecast worsens, there's a real risk customers will put off buying Ted's fancier frocks.

"Ted hasn't managed to change the tide either, with retail sales still taking a serious knock overall. Ted was struggling before the outbreak, so the pandemic came at an already precarious time. Crucially the group seems to be putting some legwork into improving its buying processes, which should ultimately feed into a stronger core business.

"Overall there's a lot of work to be done and executing a full blown strategic turnaround in the current climate is a tall order. The priority from here will be continuing to improve the brand proposition and getting tills ringing, but without slashing prices too much, otherwise profits won't be able to reap the benefits. That's a difficult thing to do in a marketplace that becomes more competitive by the day."