Ted Baker sees revenues rise 50% but problems in their business model remain
Ted Baker has reported a 50% leap in quarterly revenues as the high street fashion chain moves to recover from a slump in sales during the coronavirus pandemic.
The company said a pick-up in demand in key markets during the 16 weeks to 14 August had allowed it to move back to full-price sales, ending a focus on heavy discounting during the COVID-19 crisis.
Despite the rise in revenues, however, plans for a new website have been delayed until 2022 due to technical problems, although the company has said they do not expect this to affect sales during the Christmas season.
Ted Baker’s overall sales were aided by a 5% profit margin uplift, with its out-of-town stores performing better than town centres during the period as pandemic restrictions eased.
However, they took a hit to online sales volumes as a result of the price rises but said the move would also shore up its brand position.
Store sales remained 45% down on the same period in 2019 – before the pandemic struck.
Commenting on the latest developments at Ted Baker, Susannah Streeter, Senior Investment and Market Analyst at Hargreaves Lansdown, commented: ‘’Ted Baker has been trying to iron out some pretty deep creases in its operations and from this disappointing update it seems parts of the business might have to be shoved back into the wash again to start afresh.
“What is particularly worrying is that online sales have fallen back at a time when the group most needed to inject its digital operations with a big dose of energy. The company attributes this to fewer discounts during the period, which although is welcome, it still shows that shoppers were lured by offers of a bargain rather than a desire to snap up coveted new styles.
“Although sales overall have grown 50% since the same period last year, that’s not a huge snap back, given the pandemic tore a hole through its collections, as more formal wear, which the group was known for, went right out of fashion.
“Due to technical issues the launch of the new online platform has been delayed to early 2022. Although the group claims it will have no material impact on online sales, it’s yet another setback when the group is desperate for all the firepower to get this part of the business moving.
“The other big issue for the group is the location of its stores. It’s reliant on many concessions in department stores and stores in high streets, where footfall is still languishing well below pre-pandemic levels. Consumer confidence is returning to shopping malls in the UK and North America which will come as a relief, but footfall continues to be stronger in retail parks out of town where the company has a smaller physical presence.
“There is tinkering around the edges with the store estate, but the footprint of stores still needs a major shake-up, especially given that sales are around 30% below pre-pandemic levels.
“There are some bright spots among the racks of challenges. Customers have so far given the Autumn Winter collection the thumbs up with the pace of early purchases encouraging as weddings and Christmas parties return.
“But there is little so little breathing space, buying teams will have to nail the right look season after season, to bring back the custom the company has been elusively searching for.’’