Ted Baker bucks the trend as diversity drives sales

The maverick retailer delighted the audience at our flagship event in March with his leftfield and amusing tales of how he approaches business.

But the performance of Ted Baker – the brand he founded 28 years ago – continues to be no laughing matter. In a good way.

“Ted Baker is successfully navigating these choppy waters”

While many heavyweight fashion rivals – Next, John Lewis, M&S – feel the impact of brutally tough trading conditions, as evidenced by figures from Kantar this week, Ted Baker is successfully navigating these choppy waters.

Last week the retailer reported half-year profits up 20.5% to £21.5m, while group global sales jumped 14.4% to £259.9m.

However, it has not all been plain sailing. 

Kelvin admitted that trading conditions have been “challenging” across all its markets. Indeed, Ted Baker’s share price has endured a bumpy ride in the last year.

But UK and European retail sales rose 8.5% in the first half. The retailer, as usual, did not disclose a like-for-like figure.

The benefits of diversity

So what is maintaining Ted’s position as an outlier in the fashion sector?

Jefferies analyst Charmaine Yap said the performance was “testament to Ted’s brand strength, diversified business model and quality of the management team”.

Aside from store and online sales, the retailer also books significant revenue from its wholesale and licensing division.

Its wholesale business in particular performed strongly in the first-half, when sales were up 16.7% to £68.4m. Gross margins also increased at the division.

“Ted Baker appears to benefit from the fact that it sells a lifestyle”

As Liberum analyst Tom Gadsby noted, that compared to a “meltdown” in wholesale revenue for some rival brands.

Licensing revenue rose 23.2% to £7.9m, and ecommerce was also a bright spot as sales jumped 29.7%.

Ted Baker appears to benefit from the fact that it sells a lifestyle – even offering its own furniture and bedding – that people want to buy into.

That approach has been personified by its Ted Baker & Moore store, opened in London’s Spitalfields market last year, which includes headphones, glasses and a grooming room. It also innovated with the launch of a shoppable advert.

An international outlook

Ted Baker’s impressive and growing international business also holds it in good stead.

Half-year retail sales in North America jumped nearly 30% to £51.1m. That will be helped with the opening of two new stores in the US and one in Canada.

Meanwhile in Asia, retail sales leapt 15.8%. A new opening is planned in China along with franchise openings in Taiwan and Vietnam.

“International sales will exceed 40% of group revenue by 2019”

All this means, according to Liberum estimates, that international sales will exceed 40% of group revenue by 2019.

Like others, Ted Baker will face a hit from the slump in sterling because it sources a significant amount of its goods in dollars and euros.

But healthy international sales will help counterbalance that.

As Hargreaves Lansdown analyst George Salmon put it: “Any aspirational fashion brand that can consistently grow sales across five continents without advertising is doing something right.”