Ted Baker reported group revenue down 44.2% for the 53-weeks ended 30th January 2021 financial results.
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Rachel Osborne, Chief Executive Officer, commented, “We are making good progress against our strategic transformation plan and Ted Baker is increasingly well placed to take advantage of the significant growth opportunities ahead of us. The Ted Baker brand has strengthened further, with the number of active customers growing to 1.2m by the end of the year.”
“While the impact of COVID-19 is clear in our results and has amplified some of the legacy issues impacting the business, Ted Baker has responded proactively and is in a much stronger place than it was a year ago. During the period, we delivered robust cashflow generation, fixed our balance sheet, refreshed our senior leadership team and today we are upgrading our financial targets for the second time since outlining our new strategy last summer,” continued Osborne.
“Additionally, we have made good progress with our sustainability strategy, Fashioning a Better Future, including the mapping of all of our factory partners within our supply chain and significantly increasing our usage of cotton from sustainable sources to 69%. We are a year into Ted Baker’s transformation plan and continue to believe that we have the right strategy and team in place to set the business up for a stronger, more sustainable future,” stated Osborne.
In June 2020, Ted Baker launched its three-year strategic transformation programme, Ted’s Growth Formula. The progress in executing this plan has been encouraging, despite several of the legacy issues facing the business having been amplified by COVID. Alongside a rapid and effective response to the pandemic, the foundations of its business are now fixed, and the Group is switching its focus to growth.
The Ted Baker brand remains healthy, notwithstanding the impact of extensive store closures during the pandemic lockdown period. Customers have responded positively to our refreshed social media, campaign imagery and new product. NPS increased during the period and we have 1.2m active digital customers.
The business has demonstrated cashflow discipline throughout the period, with a tight grip on working capital and the implementation of a new commercial stock cycle.
The Group commenced a full cost review at the start of the year, which increased in scope and scale during COVID, with US$37 million of annualised payroll savings and US$9.6 million of negotiated rent savings during the year.
The Chinese business grew 6% during the year, despite the store closures during Q1. Growth was robust in both stores and online and it has a healthy pipeline of new stores in the year ahead. Q1 2022 has seen growth of 262% vs. prior year and 47% growth vs. Q1 2020.
These strong foundations have supported its further progress across the three core pillars of its strategy, which are designed to deliver a structurally more profitable business with higher ROCE and higher sustainable free cash flow generation.
New product pyramid are in place, ensuring that brand identity is reflected in product while maintaining appropriate alignment with the market.
Mad(e) in Britain capsule collection, which sits at the top of the pyramid and sets the creative tone for the collection, launched in November 2020 and was positively received.
New Global Creative Director Anthony Cuthbertson joined in November 2020 and has hit the ground running, bringing a new energy and creative vision to Ted Baker.
Good progress against the Group’s sustainability targets and a broader ESG programme in development, including 69% of cotton from sustainable sources and 100% of terminal product being donated to charity and avoiding landfill in the financial year.
All Ted Baker’s key metrics relating to e-Commerce and digital improved year-on-year, including new customer acquisition, total customers, online conversion rate, social media engagement, and retention.
Significant enhancements to its digital experience. There was a major upgrade of its payment options to now include Apple Pay, Google Pay, Klarna and a series of local payment options. There was the introduction of virtual appointments via Hero, with in-store colleagues. Ted Baker launched its new VIP programme DevoTED, Live Chat, among the first in its peer group to introduce this feature, as well as the launch of Live Commerce.
The Group have signed several new high-quality product licence deals with category-leaders in recent months:
Building on the successful start to its Childrenswear licence, NEXT has been appointed as Ted Baker’s new licence partner for lingerie and nightwear.
Baird Group has been appointed as its new licence partner for Men’s Formalwear for the UK and Ireland.
Bedeck has been appointed as its new licence partner for bedding and towels.
The Group has strengthened its territory licence division with a number of deals. The strategic partnership with AFG has been enhanced, to now include a full omni-channel relationship for retail, eCommerce and wholesale for much of the MENA region. AFG has committed to open 14 new stores in the region over the coming six years. The agreement have extended for ten years. MAP has been appointed its new licence partners for Indonesia.
Ted Baker has made material savings across its central costs and retail store costs.
Annualised savings across both functions will be US$37.5 million per annum at a cash cost of US$4.7 million, ahead of previous guidance. The Group has negotiated and delivered rent savings of US$9.6 million during the financial year. It also benefitted from US$33.7 million of turnover-related rent savings, reflecting the flexible nature of a large amount of our Retail space. It will be continuing its programme of rent renegotiations in the year ahead to reflect the new commercial realities.