Under a cloud of consumer uncertainty, exacerbated by competitive discounting, Ted Baker (TED) produced a creditable performance for FY2019, although analysts will have to judge whether the 266 basis point reduction in the gross margin represents a temporary effect, or if it heralds a long-term trend.
The contraction in gross margin was not entirely unexpected given the improved full-price sell-through rates of the previous year. However, it was further dampened by the increase in promotional activity, as the fashion chain responded to increasingly difficult trading conditions, which show few signs of abating.
Statutory returns were in line with the warning issued in February, but the overall revenue increase masked a patchy performance across the business segments. In the retail division, store revenue was flat at constant currencies, while sales per square foot declined by 4.9 per cent on the same basis. However, Ted followed industry peer Next (NXT) by announcing a surge in e-commerce sales, up 20.4 per cent to £122m. The higher-margin wholesale channel boosted revenue by 5.7 per cent to £157m, while licensing revenue expanded by 3.1 per cent to £22.1m.
Analysts at Liberum believe the company "has all the armoury to overcome" the "confluence of both cyclical and structural dynamics" in its market. They forecast adjusted pre-tax profits of £70.7m and EPS of 124p in 2020, rising to £74m and 129.7p in 2021.
| TED BAKER (TED) | ||||
| ORD PRICE: | 1,632p | MARKET VALUE: | £728m | |
| TOUCH: | 1,628-1,632p | 12-MONTH HIGH: | 1,312p | LOW: 2,988p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 549p | NET DEBT: | 51% | |
| Year to 26 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 388 | 48.8 | 82.0 | 40.3 |
| 2016 | 456 | 58.7 | 101 | 47.8 |
| 2017 | 531 | 61.3 | 106 | 53.6 |
| 2018 | 592 | 68.8 | 119 | 60.1 |
| 2019 | 617 | 50.9 | 91.5 | 58.6 |
| % change | +4 | -26 | -23 | -2 |
| Ex-div: | 16 May | |||
| Payment: | 22 Jun |
