Ted Baker's (TED) shares experienced a rare loss of form in 2016 as investors took fright due to worries about demand from Asia early in the year and then Brexit following the June referendum. But through all this, the fashion group's business continued to deliver a resilient performance while management continues an international investment drive. We think the attraction of the brand, the group's market position and the excellent long-term growth potential this gives Ted Baker should get better recognition from investors in 2017.
- Robust third quarter
- Brand strength
- Multichannel sales
- UK tourism boost
- Concerns over Asian growth
- Cost inflation
The foundation of the group's appeal lies in the strength of its 'global lifestyle brand', coupled with multiple routes to market - namely retail (50 per cent of profit), wholesale (38 per cent) and licensing (12 per cent). These channels are increasingly complemented by a growing online business. The breadth of Ted Baker's sales platforms means it has been able to consistently achieve high turnover growth from a relatively small store and customer base. And the company is currently undertaking a substantial investment programme (capital expenditure is expected to come in at £45m in the year to the end of January) to underpin future growth, including the development of a European distribution centre, increased international store openings, refurbishments and upgrades to business systems.