Ted Baker Plunges as New Warning Deepens Clothier’s Woes

(Bloomberg) -- Ted Baker Plc lost more than a third of its value after the U.K. apparel chain sank to a loss and warned that its performance could worsen amid price competition and a shift to online shopping.

The retailer has been reeling since the resignation of founder Ray Kelvin, after allegations that he gave employees unwanted hugs. While the company has moved to improve office conduct, it’s succumbing to a broader retail crisis that has prompted U.K. stores to slash prices in an effort to move unsold goods.

Unseasonably warm weather in September only added to Ted Baker’s challenges. The company on Thursday also blamed Brexit and broader political and economic uncertainty for the consumer funk. The stock fell as much as 38% to the lowest level in more than eight years in London trading.

“No one is immune” as retailers battle it out for a shrinking consumer spending pool, Chief Executive Officer Lindsay Page said in a telephone interview. “As far as what happened pre-Christmas with Ray, we have seen no evidence that’s had any effect on the brand or is influencing these results.”

Ted Baker named Page as CEO in April after filling the role in an acting role since December, when Kelvin went on leave before later resigning.

Revenue fell 0.7% in the first six months and the company recorded a pretax loss of 23 million pounds ($28 million). Performance will be below last year’s levels for the full year if current trends persist, the retailer said in a statement.

“The growth prospects for the business have largely dissipated,” said Piral Dadhania, at analyst at RBC Europe.

Ted Baker’s pricing strategy appears to be disconnected with its brand and quality, according to Dadhania, who cited price increases of as much as 30% in categories such as men’s blazers and deeper markdowns than rivals on crucial items such as men’s polo t-shirts and shirts. Ted Baker sells men’s peacoats for 339 pounds and women’s skirts from 59 pounds.

Wayne Brown and Adam Tomlinson, analysts at Liberum Capital, slashed their pretax profit estimate for the year by about 39% and placed their buy recommendation under review on the back of the company’s “unexpectedly poor” results.

“Forecasts and outlook have been impacted a very tough market backdrop where discounting is prevalent, and consumer uncertainty has led to unpredictable trading patterns,” Brown and Tomlinson wrote in a note to clients.

To contact the reporters on this story: Greg Ritchie in London at gritchie10@bloomberg.net;Lisa Pham in London at lpham14@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Marthe Fourcade

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