Ted Baker defies gloom with 11% sales rise
FTSE 250-listed clothing retailer Ted Baker released its full-year results on Thursday. Sales hit £591.7million in the 52 weeks to January 27, up 11.4 per cent on the previous year, or 9.6 per cent after stripping out the beneficial impact of currency movements.
Ted’s Wholesale and Franchise operations both grew, but the retail division, with sales of £442.5million, remains the most important. Within retail, online was the start performer, with underlying sales rising 39 per cent.
Underlying sales growth was 1.8 per cent in-store, but this was boosted by the opening of new stores.
All this meant underlying pre-tax profit increased by 11.7 per cent to £73.5million, with the final dividend of 43.5p bringing the total 2017 payment to 60.1p.
However, the results weren’t all the market had hoped for, and the shares fell sharply following the release.
The impact of the Beast from the East was one reason for the sell-off. Anything that keeps customers at home is bad enough, but the fact the cold snap came just as shops were rolling out the spring/ summer collections made the snow particularly untimely.
There’s also the fact conditions remain challenging in some key markets, while investors were surprised to see net debt increase to £111.8million.
All things considered, there are several reasons why Ted can continue its excellent long-term performance.
The group’s quirky designs offer high-fashion at accessible prices, filling an attractive niche in the market. We also like the strong growth in the online operation, and feel the steady pace of the roll-out into new locations across the world is sensible.
Ted Baker operates from 532 stores, concessions and outlets worldwide. That leaves plenty of room for growth. Expanding the footprint should help keep the impressive dividend record going, at least in the short-term. The shares currently offer a yield of 2.7 per cent.
Ted’s successful growth has seen it raise the dividend each year this century, and by at least 10 per cent in every year other than during the depths of the financial crisis. “This article is designed for investors who make their own decisions without advice, if unsure whether an investment is right for you, you should seek advice. Shares can rise and fall in value so you could get back less than you invest.”