Harassment allegations levelled against Ted Baker chief executive Ray Kelvin failed to diminish desire for the UK lifestyle brand over the Christmas trading period, with the company bouncing back from a disappointing third-quarter.
In a trading update today (9 January), the UK-listed company said retail sales increased by 12.2% in the five weeks to 5 January compared to the same period last year. E-commerce sales jumped 18.7% and represented 25.7% of total retail sales. The sales rise follows a 0.2% decrease in group revenue in the third quarter.
Despite increased promotional activity, gross margins remain in line with its expectations for the full year, and the retailer expects to end the year with a clean stock position – meaning that results for the year to 26 January will be in line with its expectations.
“The Ted Baker brand has delivered a good performance across both our stores and e-commerce business, despite the continuing challenging external trading conditions across our markets,” says acting CEO Lindsay Page. “This result again reflects the strength of the brand and the quality of our collections.”
Page has taken the reins from company founder Kelvin, who is taking a voluntary leave of absence following allegations regarding his conduct. Last month, Ted Baker appointed independent law firm Herbert Smith Freehills LLP to conduct an external investigation into claims he reportedly forced hugs and kisses on employees. In its update today, Ted Baker said the work of the independent external investigation is progressing.
The group also announced the completion of it acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA, which closed on 1 January. The GBP20.3m (US$25.8m) deal was first announced in September and sees the UK lifestyle brand buy back its footwear licence from Pentland Group after 17 years. The move is expected to help drive growth in its footwear business.
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Emily Salter, retail analyst at GlobalData, notes premium lifestyle brands still hold appeal for consumers as midmarket retailers continue to suffer. “Shoppers are especially willing to trade up over the Christmas period, and the retailer’s strong brand identity has enabled Ted Baker to capture spend.”
She adds: “The retailer stated that discounting has not affected the gross margins or expectations for the full year, a sentiment which many other retailers may not be in the position to echo given the challenging retail environment characterised by prolonged heavy discounting.”