Ted Baker today showed the costs of Covid-19 and “a year without precedent” on its business – including an £86m pre-tax loss and 953 redundancies. It now plans to rebuild through a focus on digital growth in a multichannel context.
The update came as the upmarket fashion retailer, ranked Top250 in RXUK Top500 research, reported sales of £169.4m in the first 28 weeks of its financial year - to August 8. Top line pre-tax losses came in at £38.4m but one-off costs of £48.1m pushed the retailer to a half-year loss of £86.4m. Those one-off costs included a £45.8m write downs in the value of its assets as a result of the “weaker trading environment” and £10m in restructuring costs related to its redundancy programme, offset by a £17.6m gain on the £77.8m sale of its Ugly Brown Building headquarters. In all, the retailer has made 953 people redundant across both head office and stores, out of a workforce of more than 2,600.
Ted Baker chief executive Rachel Osborne joined the retailer as chief financial officer last November and a month later was appointed to acting chief executive, a role confirmed in March 2020. She said today: “There is little doubt that 2020 will go down in history as a year without precedent. We have all faced challenges not seen before and we have been required to take actions previously almost unthinkable. Covid has created a major demand shock across the global economy, most especially in consumer sectors, that few, if any, have been able to avoid. It has been an unforgettable period mostly for the wrong reasons, during which Ted Baker has had to navigate a challenging demand environment while also addressing the problems of our past.”
Osborne arrived in the business as it was reexamining the way that its inventory was valued, and has led a year of reengineering the company, from refreshing the brand and its products to reducing its costs – while ensuring its production is sustainable and ethical through a Fashioning a better future programme that was expanded during the year. It is currently aiming to source 100% of its cotton from sustainable sources by 2024, and its leather by 2025. She said that the retailer’s stores, primarily in city centres, had not been well placed for the effects of the Covid-19 pandemic – all are now suffering falling footfall. It is now looking to renegotiate its rents while also focusing on digital sales. A cost saving programme has already cut costs by £31m a year – through measures including redundancies. And the retailer has introduced mechanisation into its Derby warehouse as it looks to increase its throughput tenfold, and is also looking for opportunities to automate processes beyond warehousing.
Ted Baker says it will prioritise digital and ‘asset light’ growth, and has already seen online sales growth strongly in the first half of the year. Before Covid-19 hit, the retailer had already seen online sales improve, and this momentum, it says, accelerated during the first half of the year. “Encouragingly, all our key metrics related to ecommerce and digital improved year-on-year in H1, including new customer acquisition, total customers, online conversion rate, social media engagement and retention,” Osborne said in today’s statement.
During the half-year the retailer completed its introduction of ship-from-store, upgraded its payment options and introduced live chat and virtual appointments with in-store staff, using Hero technology. Digital marketing spend has increased at the same time.
The retailer is also working with third-party retailers through licensing - giving Next a licence to produce its lingerie and nightwear, following on from its agreement on childrenswear. It has appointed Baird Group as its licence partner on mens formalwear in the UK and Ireland, and will no longer make this itself. Previously, it says, it relied too heavily on formalwear and occasion wear, and that will hit sales in both halves of this year.
However, the retailer says that it can see what life is likely to look like after Covid in its China joint venture, where sales have recovered, and full-price sales are 48% up, year-on-year, in the third quarter of its financial year. “The team has done a fantastic job to ramp up our ecommerce capabilities as well as optimising our online to offline customer journey,” says Osborne.