Ted Baker planning more ‘showroom’ stores as online sales lift profits by 14pc
Ashley Armstrong TED Baker has strutted ahead of its fashion rivals by delivering a 14pc jump in profits for the first half of the year on the back of its ambition to become a global brand.
The business, which has recently opened new stores in Los Angeles and Shanghai, recorded pre-tax profits of £25.3m for the six months to Aug 12, compared to £21.5m the year before.
Total sales also lifted by 14pc to £295.7m during the period, propelled by a 43.8pc surge in online sales to £42.7m. Weaker sales in North America took some of the gloss off the otherwise upbeat numbers. Sales growth in the region has slowed from 28.7pc last year to 18.8pc due to “higher levels of competitor promotional activity … and lower international tourism”, it said. Peel Hunt analysts said they believed the numbers “pointed to negative likefor-like sales at store level, but e-commerce continues to grow strongly”.
Ray Kelvin, Ted Baker founder and chief executive, blamed distractions from when “Trump was at residence”, referring to occasions when the US president’s security team shut down much of shopping destination Fifth Avenue in New York.
Mr Kelvin also said he expected his US business to be affected by the “bad weather in Miami, the floods in Houston, earthquakes in Mexico and the horrible attack in Las Vegas”.
“It’s a difficult market, but we are faring better than anyone else,” Mr Kelvin said of the array of US challenges.
UK and European sales rose by 11pc to £145.6m during the period, despite the challenging conditions. The retailer also revealed that sales per square foot, excluding online, inched 1.6pc higher to £439 during the half year, although they were down by 0.3pc in constant currency, a reflection of the weaker sterling.
Mr Kelvin said that Ted Baker was more cushioned from currency pressure than its rivals because of its sizeable international business, which gave it a natural hedge.
He said that the brand’s products were “not as price sensitive compared to other people’s so if we need to absorb a couple of extra pounds, we can”. Mr Kelvin said that as yet shop prices had not risen although Ted Baker dresses can cost between £159 and £499, significantly more than its high street rivals. Unlike other retailers, which have hundreds of stores across the UK, Ted Baker has kept a lid on its bricks and mortar expansion plans and is now opening shops in order to boost its online business, by using them as showrooms for what is available online and helping to fulfil internet orders with click and collect services.
“We’re full steam ahead with online but you have to have shops, people like to shop and touch and feel products. It’s part of doing business and trading,” said Mr Kelvin.
His comments came just a day after Aviva Investors, Europe’s largest retail property manager, predicted the death of the traditional shop, warning that most bricks and mortar stores will be wiped out by the rise of online retailing.