Ted Baker shares flash red as profits dented by hugging scandal, House of Fraser collapse and desperate discounting
- Ted Baker profits sunk 26.1 per cent to £50.9million in the year to January 26
- Its shares sunk more than 5 per cent in early trading on Thursday to £16.17
- The firm has been grappling with a scandal that pushed founder and boss to quit
- It was hit by heavy discounting and costs linked to the House of Fraser collapse
Ted Baker shares are in the red again today, down nearly 6 per cent, after it came clean on a 26 per cent slump in full-year profits.
The embattled fashion firm has endured a torrid year during which it grappled with a scandal that eventually pushed its founder and CEO Ray Kelvin to resign.
The firm said its bottom line was dented by hefty one-off costs of more than £12million relating to an investigation into claims that Kelvin enforced a hugging culture at the firm.
Ray Kelvin (above) founded Ted Baker 32 years ago but quit the group earlier this month
The figure also includes unpaid bills it was forced to write off following the collapse of House of Fraser in which Ted Baker had concessions, and the cost of its No Ordinary Shoes acquisition.
With exceptional items stripped out, profits fell 14.3 per cent.
The firm bemoaned tough competition in the market. It said its profit margins were eaten into by heavy discounting as it resorted to promotions to shift stock.
With exceptional items stripped out, Ted Baker’s profits fell 14.3 per cent in the last fiscal year
Sales were 4.4 per cent higher across the group at £617million, but this is a far cry from Ted Baker’s previous growth of more than 11 per cent.
Executive chairman David Bernstein said: ‘Performance has been impacted by the very difficult trading conditions throughout the year, including competitive discounting across the retail sector, consumer uncertainty, the well-publicised challenges facing some of our UK trading partners, and the unseasonable weather across our global markets at different points throughout the period.
Bernstein is providing additional support to acting chief executive Lindsay Page, who assumed the role following the suspension of Kelvin last year.
Google Finance graph shows the decline in Ted Baker shares in the last year, from nearly £30
Kelvin, who founded Ted Baker in 1988 in Glasgow as formally left the firm earlier this month, came under the spotlight after staff launched a petition against his conduct.
He was accused of massaging employees, kissing their ears and asking some to sit on his lap.
Emily Salter, a retail analyst at GlobalData said: ‘The past year has shown that premium brands are not immune to the problems faced by midmarket retailers.
‘Its physical locations continue to struggle with declining footfall and weak consumer confidence persists.’
‘The brand must ensure it does not succumb to heavy discounting, to retain its margins and to ensure that consumers do not become accustomed to sales and therefore change their purchasing habits,’ Salter adds.
Ted Baker’s shares have sunk from nearly £30 a year ago, to a little over £16 today.