Fashion retailer says it expects pretax profit of £5m compared with £50m last year
Fashion retailer Ted Baker descended further into crisis as it issued a stark profit warning, scrapped its dividend and announced the immediate departure of both its chief executive and executive chairman.
The shares, which had already lost three-quarters of their value this year, plummeted a further 35% to 258p, but later cut their losses to 333p, down 16%, valuing the company at £150m.
Lindsay Page, the chief executive, has been replaced on an interim basis by finance director Rachel Osborne. Page had taken over from the company’s founder Ray Kelvin in April, after the latter was accused of a regime of “forced hugs” and harassment. David Bernstein, the executive chairman, has also quit and been succeeded by Sharon Baylay, an independent director, as acting chair.
In its third profit warning this year, the retailer predicted a full-year pretax profit of £5m, “with a potential outcome of up to £10m dependent on Christmas trading and final year-end review”. Last year, it made a pretax profit of £50.9m. It blamed “unprecedented” levels of discounting on the high street, which has hurt its margins.
The company said trading in November and during the Black Friday period was worse than expected, and it expects difficult conditions to continue. Retail sales fell 5.5% between 11 August and 7 December, while wholesale rose 0.6%, leaving overall revenues down 3.9%.
The retailer, which has 560 stores and concessions worldwide, including 199 in the UK, has hired independent consultants Alix Partners to carry out a review of its operational efficiency, costs and business model. A separate review of its assets began in October.
The update comes a week after the chain admitted it had overestimated the value of its stock and appointed a law firm to carry out a review.
The company said: “The last 12 months have undoubtedly been the most challenging in our history.
“We are taking the necessary immediate actions to address underperformance and improve efficiencies across the wider group.”
Retail analyst Nick Bubb said shareholders may take some comfort from the fact that Osborne, who joined Ted Baker as finance chief in September and uncovered the inventory blunder, has been installed as chief executive, but the trading update “will go down like a lead balloon”.
“If the founder Ray Kelvin has been waiting for more bad news like this before launching his much-expected rescue bid then he has been wise (notwithstanding the huge loss he has suffered on his 35% stake), but the stock market did not put too much weight on that happening this side of Christmas when dealings started at 8am.”
Page, the former joint chief operations officer and chief financial officer, had been with the company for 22 years and, alongside Kelvin, played a key role in its expansion into a brand present in 50 countries, Ted Baker said.