UK-based fashion retailer Ted Baker has issued a stark profit warning, scrapped its dividend and announced the immediate departure of both its chief executive and executive chairman.
The shares, which had already lost three-quarters of their value this year, plummeted a further 35% to 258p, but later cut their losses to 333p, down 16%, valuing the company at £150m.
Lindsay Page, the chief executive, has been replaced on an interim basis by finance director Rachel Osborne. Page had taken over from the company’s founder Ray Kelvin in April, after Kelvin was accused of personal misbehaviour in his role. David Bernstein, the executive chairman, has also quit and been succeeded by Sharon Baylay, an independent director, as acting chair.
In its third profit warning this year, the retailer predicted a full-year pretax profit of £5m, “with a potential outcome of up to £10m dependent on Christmas trading and final year-end review”. Last year, Ted Baker recorded a pre-tax profit of £50.9m. It blamed “unprecedented” levels of discounting on the high street, which has hurt its margins.
The company said trading in November and during the Black Friday period was worse than expected, and it expects difficult conditions to continue. Retail sales fell 5.5% between 11 August and 7 December, while wholesale rose 0.6%, leaving overall revenues down 3.9%.
The retailer, which has 560 stores and concessions worldwide, including 199 in the UK, has hired independent consultants Alix Partners to carry out a review of its operational efficiency, costs and business model. A separate review of its assets began in October.
RPA Perspective The update comes a week after the chain alerted investors that it had over-stated the value of its stock and had appointed a law firm to carry out a review.
The company said: “The last 12 months have undoubtedly been the most challenging in our history. We are taking the necessary immediate actions to address underperformance and improve efficiencies across the wider group.”
Retail analyst Nick Bubb – a previous speaker at RPA events - said shareholders may take some comfort from the fact that Osborne, who joined Ted Baker as finance chief in September and uncovered the inventory blunder, has been installed as chief executive, but the trading update “will go down like a lead balloon”.
Page, the former joint chief operations officer and chief financial officer, had been with the company for 22 years and, alongside Kelvin, played a key role in its expansion into a brand present in 50 countries, Ted Baker said.
