COVID-19 exacerbates Ted Baker’s troubles

Following today’s release of Ted Baker FY figures for 2019/20,

Emily Salter, Retail Analyst at GlobalData, a leading data and analytics company, comments:

‘‘After a turbulent 2019, COVID-19 has dashed any hopes of a recovery in 2020 for Ted Baker as fashion is forecast to be one of the most negatively impacted sectors, with GlobalData predicting a 33.1% fall in UK clothing & footwear expenditure this year. Ted Baker has been particularly impacted due to its reliance on occasionwear, already having to resort to regular discounting to drive sales as consumers have little reason to purchase these items.

Group revenue fell by 36.0% for the 14 weeks to 2 May versus last year, with retail sales declining by 33.9% and online increasing by 50.3%. Although its sales are likely to start improving in the next few weeks as stores across Europe start to re-open, recovery will be slow as many consumers will be unwilling to return to shopping locations and economic uncertainty will be high, reducing propensity to spend on premium brands. In addition, demand for its products will remain subdued with weddings and social events on hold for the foreseeable future. This morning the retailer announced that it is raising £95m to reduce its debt and invest in its transformation plan, as it was in need of a turnaround before the COVID-19 outbreak so this is even more necessary now.

Prior to the onset of COVID-19, Ted Baker’s sales were suffering as the appeal of the brand was waning as it struggled to resonate with shoppers, with store and online revenue falling by 5.3% and 2.4% respectively in FY2019/20. Though the retailer blamed discounting for this decline, the fact that it was unable to drive growth online points to problems with the relevance of the brand. It now has a permanent CEO and CFO to help address these issues but turning the business around will not be an easy feat as consumer shopping habits are likely to change in the long term due to COVID-19, with shoppers purchasing less frequently and increased spend shifting online.”

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