Ted Baker reports 50% sales growth

Ted Baker shares have risen by 40% over the last year. Today’s trading update reports continued progress with the group’s turnaround.

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Sales rose by 50% at fashion group Ted Baker (LSE: TED) during the 16 weeks to 14 August, compared to the same period last year, which was hit by the pandemic.

However, although many of the company’s shops were open during the period, management said footfall remains 45% below the equivalent period in 2019. The company said this is due to shoppers’ preference for retail parks and regional locations — areas where Ted Baker has fewer stores.

City centre stores are expected to recover gradually, as workers return to offices and international tourism recovers.

Ted Baker’s fashion revamp

Turnaround boss Rachel Osborne says that efforts to rebuild the group’s premium branding are succeeding. Discounting has been reduced, resulting in a 5% increase in trading profit margins. The company said that it ended the second quarter without excess stock.

Ted Baker’s new Autumn/Winter 2022 collection has been “positively received”, with encouraging early sales. A new “product pyramid structure” is said to be working well.

One area that has fallen behind schedule is the launch of the retailer’s new e-commerce platform. The company said that “some technical aspects” are taking longer than expected to resolve. With the Christmas peak trading season approaching, management does not want to take chances. The launch of the new platform has now been delayed until “early 2022”.

This change isn’t expected to have any impact on e-commerce sales, which accounted for 39% of total retail sales during the latest quarter.

Overall trading is said to be in line with expectations so far this year. The group said that it has £106m of available liquidity, providing comfortable headroom against peak cash requirements in September/October.

Ted Baker will publish half-year results on 11 November 2021.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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