Ted Baker sees festive sales slump, warns stores may not reopen until May

(Sharecast News) - Ted Baker saw revenues plummet by nearly 50% in the fourth quarter, after Covid-19 restrictions shut its shops and weighed heavily on demand.
Updating on fourth-quarter trading, Ted Baker said group revenues fell 47% in the 13 weeks to 30 January 2021. The pandemic closed its entire UK store portfolio for the majority of the trading period, along with large parts of its international estate. Where stores were open, footfall shifted to locations where Ted Baker has only limited physical presence, such as local high streets.

Demand for occasion wear and outerwear, normally big sellers during the period, also slumped as lockdown restrictions kept people at home.

Directly operated e-commerce sales rose 2%, but group e-commerce eased 1%. Wholesale and licence revenues fell 44%, hit by both Covid and Brexit-related shipping delays towards the end of the period.

Chief executive Rachel Osborne said: "While we have made encouraging strategic progress, trading over the fourth quarter was difficult and heavily impacted by the Covid pandemic.

"Looking forward, we are taking a cautious planning approach and now assume that UK stores will remain closed until the end of May followed by gradual recovery over the rest of the first half."

The group is now expecting an "ongoing materially negative impact" across both retail and wholesale until the end of May. It also expects up to £5m of incremental costs associated with Brexit, reflecting extra duty and shipping costs only partially offset by a new customs warehouse capability.

As at 0945 GMT shares in Ted Baker were off 4% at 99.85p.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Ted Baker is facing the perfect storm. Its brand is synonymous with wedding guest, occasion and work wear, which not what people buy during a pandemic.

"It wasn't in the greatest position before the crisis, meaning coronavirus has simply added weight to already tired shoulders.

"The group has pulled its socks up, with the balance sheet now in a better position. The group will want to avoid coming back cap in hand to investors to shore up its finances once more. But if conditions improve at a slower rate than expected, this can't be ruled out. Internal cost saving efforts can only go on for so long."