21 Jul 2020
Posted in Retail
Positive online sales not enough to shield Ted Baker from a COVID-19 inflicted disaster
Following today’s release of Ted Baker figures for the 11 weeks to 18 July 2020, Emily Salter, Retail Analyst at GlobalData, a leading data and analytics company, comments:
“Hit hard by the impacts of COVID-19 due to its reliance on occasionwear and workwear, Ted Baker’s sales have suffered due to global store closures and a lack of demand for its key products. Other fashion retailers have reported improving revenue from the start of June as lockdowns across Europe eased and consumers started to purchase clothing for social occasions, but Ted Baker is less likely to have benefitted from this due to its occasionwear product focus and slightly older customer profile of 30-45 year olds, with younger consumers more willing to start purchasing again.
“Retail revenue was ahead of Ted Baker’s base case revenue scenario stated in June, with store sales predicted to decline 83% and online sales forecast to fall 19%, giving investors some hope and sending its share price up 12% this morning. Despite this, the steep sales decline experienced will have left the retailer in an extremely difficult position with the need to discount excess stock, damaging the brand’s premium reputation and its margins.
“Online propped up Ted Baker’s performance during the period as sales rose to make up 69.0% of retail revenue (versus 25% last year). However, online growth of 35% did not offset the decline in store revenue and is not as impressive in the context of store closures, indicating that many sales did not transfer online with purchases being lost due to the lack of desire for Ted Baker’s products during lockdown. “The online channel is likely to continue to perform well even now stores are open (95% of its estate was open on 18 July), with many shoppers reluctant to return to stores due to safety concerns and changes to the shopping experience, including changing rooms being closed. The retailer has recognised this accelerated shift to the online channel, announcing it plans to cut a quarter of its staff across head office and stores. Like-for-like store sales fell 50% versus last year for the four weeks to 18 July, with shoppers in Europe and the US being less willing to buy premium clothing and demand for occasionwear remaining low due to event cancellations.”