Ted Baker Sounds Alarm Over Retail Outlook as Gloom Sets In

(Bloomberg) -- Fashion retailer Ted Baker Plc warned that business conditions will be challenging across many of its markets, adding to a slew of downbeat updates from U.K. retail chains.

Ted Baker’s gloomy outlook has been compounded by recent snowfall in a series of storms dubbed the “beasts from the east,” which held back sales of its spring-summer ranges, the company said in a statement Thursday. The shares fell as much as 8.7 percent, the most since June 2016.

The dwindling number of shoppers in U.K. town centers and recent unhelpful weather means “a more cautious stance is appropriate,” Liberum analyst Wayne Brown said by email.

Ted Baker has been one of the few strong performers in a U.K. fashion industry that’s been losing its share of consumer spending to restaurants and other leisure activities. The retailer’s comments will increase investor caution surrounding market leader Marks & Spencer Group Plc and Next Plc, which reports Friday, as well as adding to the wider malaise that has set in on the retail sector this year.

28 Percent Drop

Store sales at the U.K.’s midmarket retailers fell 28 percent in the week when the one of the beast-from-the-east storms blanketed the U.K., according to researcher BDO.

U.K. nonfood sales overall fell by 0.8 percent in February, with department stores and clothing shops experiencing declines, according to the Office for National Statistics.

“The market remains tough for retailers; even with the first glimmers of a return to real wage growth for U.K. workers this week, growth in spending is likely to remain sluggish throughout the coming year,” according to Rachel Lund, head of retail insights at the British Retail Consortium.

Amid the rise of e-commerce and increasing wage and sourcing costs, the British arm of Toys “R” Us Inc. and electronics seller Maplin have filed for insolvency this year, while home-improvement retailer Kingfisher Plc and suit seller Moss Bros Group Plc reported weak sales on Wednesday.

Ted Baker, whose online sales make up 27 percent of its U.K. and European revenue, is still in relatively good shape. Pretax profit rose 12 percent to 68.8 million pounds ($97.5 million) in the year ended Jan. 27.

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