Upgrade in store for Ted Baker?

SuperGroup’s £5 a share IPO is good news for founder Julian Dunkerton. It might also be good news for some of the retailer’s fashion peers - in particular Ted Baker.

The likely £395m capitalisation of SuperGroup is double that of Ted and its successful flotation might prompt investors to look again at the latter. While Ted trades on a higher price-earnings ratio than many other fashion groups, SuperGroup’s valuation might be a catalyst for upgrades.

Ted Baker shares many characteristics with SuperGroup. While each sells fashionable product, neither is particularly dependent on explicitly seasonal collections. Each is run by a founder with a personal stake in continued success - in Ted’s case the idiosyncratic Ray Kelvin, for whom Ted Baker is almost an alter ego through whose eyes all developments in the business are assessed. And each has similar opportunities, notably to expand internationally.

Ted Baker had an excellent Christmas - retail sales soared 19.1%. While internationally the performance was mixed, the UK beat expectations - promotions were down and margins up. Although the retail sector subsequently fell out of favour, the message from Ted in January was that the UK had got off to a good start.

Analysts signalled then that there might be scope for upgrades, despite the stock’s rally. Although international operations had been comparatively weak, there was optimism that they would improve. And opportunities remain for more UK openings.

The other characteristic Ted shares with SuperGroup is an eye for, and commitment to, product and design excellence. While Kelvin’s eccentricities sometimes flummox observers, nobody would dispute his determination to get product right and protect and enhance the Ted Baker brand.

Ted Baker will update on retail’s ‘Super Thursday’ next week, along with others including Next. Assuming momentum has continued, maybe the SuperGroup effect will focus extra attention on quirky Ted’s merits.