RNS Number:5662T
Ted Baker PLC
26 March 2002
26 March 2002
Ted Baker PLC
Preliminary Results for the 52 weeks ended 26 January 2002
Highlights
• Turnover up by 32.1% to £62.1m (2001: £47.0m) - reflecting strong
performance of all the collections:
- Ted Baker Menswear sales up by 18.2% to £31.9m (2001: £27.0m)
- reflecting the continued success of the expanded Ted Baker
Endurance collection
- Ted Baker Womenswear sales up 46.4% to £26.2m (2001: £17.9m)
now representing 42.2% of total sales
• Profit before tax and non-recurring costs up 18.3% to £9.7m (2001:
£8.2m)
• Basic earnings per share up 14.4% to 15.9p per share (2001: 13.9p per
share - restated)
• Final dividend of 5.1p per share, making a total for the year of 7.8p,
an increase of 11.4%
• Addition of new retail space with the opening of two new stores in
Meadowhall and Gatwick South and one outlet store in Portsmouth
• Development of the Ted Baker brand continues:
- Early success of Ted Baker Footwear collection, now under
licence with Pentland Group PLC
- Successful launch of Ted Baker Jean collection in the autumn
- Launch of Ted Baker Eyeware collection
- Licence agreement signed with Zeon Ltd for development of a Ted
Baker Watch collection for men and women
- Ted Baker developing distribution across the USA
Commenting on the results, Ray Kelvin, Chief Executive, said:
"Over the past twelve months we have made significant progress in the
development of Ted Baker as a global designer brand. We are particularly pleased
with the continued success of our best selling Endurance collection for men and
women. We are confident that we will continue to manage the growth of our brand
with the launch of exciting new collections and the expansion of existing ones."
Enquiries:
Ted Baker Tel: 020 7796 4133 (Hudson Sandler) on
26 March 2002 and thereafter 020 7255 4800
Ray Kelvin, Chief Executive
Lindsay Page, Finance Director
Hudson Sandler Tel: 020 7796 4133
Piers Hooper/Noemie de Andia
Visit our investor relations site at http://ww2.investor-relations.co.uk/
tedbaker/
Visit Ted's award winning e-commerce site at http://www.tedbaker.co.uk
CHAIRMAN'S STATEMENT
I am delighted to report another year of significant progress in the development
of Ted Baker as a global designer brand. All our collections performed well. We
have continued to build our strong portfolio of collections, expanding the
successful Endurance collection further and launching Ted Baker Eyewear and Ted
Baker Jean. Our international expansion is also making good progress,
particularly in the USA, despite the exceptional circumstances there in the
second half of last year.
Turnover increased by 32.1% to £62.1 million (2001: £47.0m) for the 52 weeks
ended 26 January 2002 and operating profit increased by 19.0% to £10.0 million
(2001: £8.4m). Profit before tax and before non-recurring costs increased by
18.3% to £9.7 million (2001: £8.2m). Profit before tax increased by 14.6% to
£9.4million (2001: £8.2m) and basic earnings per share increased by 14.4% to
15.9p (2001: 13.9p).
The Board is pleased to recommend a final dividend of 5.1p per share (2001:4.6p)
making a total for the year of 7.8p (2001: 7.0p) an increase of 11.4% over the
previous year. The final dividend will be payable on 21 June 2002 to those
shareholders on the register on 24 May 2002.
We have made a solid start to the new financial year with total retail sales
ahead by 10.7% for the first seven weeks, compared with the same period last
year and in line with our expectations. Wholesale sales for the same period are
46.7% ahead, in part due to earlier phasing of deliveries, and in line with
expectations.
I am pleased to announce that we have entered into a licence and distribution
agreement with Zeon Ltd for the development of a Watch collection for men and
women, which will complement our expanding accessories collections.
The Board was delighted to welcome two new non-executive directors, Robert
Breare last October and Tony Campbell last January. We believe that their
experience will be invaluable for the development and expansion of our Group. I
would also like to announce that although I have very much enjoyed working for
the Group I have decided to retire from the Board of Ted Baker PLC at the AGM on
11 June 2002. I would like to thank each member of the team at Ted Baker for
their continuing commitment and contribution, which has helped to ensure another
successful year for the business.
Brian North
CHIEF EXECUTIVE'S REVIEW
Collections
Our main collections, Ted Baker and Ted Baker Woman, performed strongly during
the period, and collections we have launched more recently, including Endurance
Accessories and Footwear, continued to develop successfully.
Menswear increased by 18.2% to £31.9 million (2001: £27.0m) particularly
reflecting the continued success and further expansion of the Endurance
collection. Womenswear grew by 46.4% to £26.2 million (2001: £17.9 million) as
we continued to extend the breadth of the range. Other collections contributed
turnover of £4.0 million, an increase of 90.5% largely reflecting the
development of Ted Baker Footwear, which will be transferred to our licensee in
the current financial year.
Retail
Our retail business performed well with sales growing by 39.0% to £41.7 million
(2001: £30.0m). During the period we opened two stores in Sheffield and Gatwick
Airport, South Terminal as well as one outlet store and a number of concessions
in leading department stores. These openings, together with a full year's
contribution from stores opened in 2001, gave rise to a 34.1% increase in
average retail square footage over the period from 46,012 sq. ft. to 61,720 sq.
ft. At the year-end, total retail square footage was 66,418 sq. ft.
Since the year-end we have opened a new store at Heathrow Terminal 4 and three
concessions, all of which are performing in line with our expectations. Our
Liverpool store, which has been closed since early February for refurbishment,
will re-open shortly. Further planned retail expansion includes the enlargement
of our New York store from 1,000 to 5,000 sq. ft in May and the opening of a
store in Paris in June.
Wholesale
Sales from the wholesale division rose by 20.0% to £20.4 million (2001: £17.0m),
driven by strong growth in our core UK market. Ted Baker and Ted Baker Women
performed excellently and other highlights included the Endurance collection for
men and women, Accessories and the Footwear collection. Overseas sales increased
by 7.2% to £0.95 million (2001: £1.34 million) after adjusting for the
replacement of US wholesale revenue with licence income.
The average number of trustee outlets in the UK was unchanged at 593 for our
main collections and average sales per outlet increased by 18.3% to £26,500
(2001: £22,400).
Licences
Licence and other income increased by 50.0% from £1.0 million to £1.5 million,
reflecting our strategy of controlling our risk in overseas territories and
specialist product categories by drawing on the experience of local partners.
Ted Baker Skinwear, our licensed fragrance range, has continued to perform
strongly over the period, with a full year contribution from the men's and
women's Endurance fragrances.
The Ted Baker brand made good progress under our US licensee, Hartmarx
Corporation, despite the difficult conditions in the United States last year,
especially following the tragic events of 11 September. The Ted Baker Menswear
range was introduced to eight Bloomingdales department stores across the USA in
the second half including a 'shop in shop' in Manhattan. After an encouraging
reaction the collection is being extended to a further 12 Bloomingdales
locations in 2002. This progress will provide Ted Baker with a strong platform
for growth both through our licensee and through directly generated sales.
Sales from the sunglasses licence, which was launched in the period, have been
encouraging and the range has been expanded in 2002 to include Eyewear. This
range is sold in specialist stores and leading department stores.
The licence and distribution agreement signed with Pentland Group PLC for
footwear and footwear accessories has started contributing to licence income
since the year-end. We believe that Pentland has the right expertise, experience
and scale of operations to build on the collection's current success and exploit
the global potential of Ted Baker Footwear.
In November 2001 we signed a licence for the manufacture and distribution of a
Ted Baker Watch collection with Zeon Ltd, the largest UK timepiece company and
market leader in sports, fashion and children's licensed watches. We are
delighted to have appointed Zeon Ltd and to date our respective teams have been
integrating well. The first contribution from this licence will be in 2002.
This year has been a significant one for the development and extension of the
Ted Baker brand. We are confident that we will continue to manage the growth of
our brand while ensuring that we retain control over the design and distribution
of our collections.
Ray Kelvin
FINANCE DIRECTOR'S REPORT
Profit before taxation and before non-recurring costs increased by 18.3% to £9.7
million (2001: £8.2m) for the 52 weeks ended 26 January 2002. The non-recurring
costs of £262,000 relate to the design and distribution of the Nigel Cabourn
collection. We took on this brand at the beginning of the year but, after a
trial period, have concluded that the investment required to re-establish the
brand is not commensurate with the potential rewards. We relinquished any
rights to the brand in November 2001.
Gross Margin
Retail gross margins decreased to 65.0% (2001: 67.4%) principally reflecting an
increased proportion of sales through factory outlets over the period. The
composite wholesale gross margin reduced from 41.6% to 38.2% reflecting a change
in sales mix. Underlying margins by collection improved or were maintained.
Above average growth from the Endurance and Footwear collections also impacted
the composite gross margin. The composite wholesale gross margin is expected to
improve in the coming year following the transfer of the Footwear business to
Pentland. Wholesale sales grew by 20.0% while retail sales increased by 39.0%
giving rise to a composite margin of 56.3% (2001: 58.0%) for the period.
Operating Expenses
Operating expenses rose by 34.2% to £26.7 million (2001: £19.9m). Distribution
costs, which reflect the opening of new retail outlets, increased by 37.3% to
£18.4 million (2001: £13.4m) in line with the increase in retail selling space.
Administration expenses rose by 27.7% to £8.3 million to (2001: £6.5m)
reflecting a full year of the investment in infrastructure costs carried out
during 2001.
Taxation
The Group has adopted FRS19 (deferred taxation) for the 52 weeks ended 26
January 2002. The standard requires the provision for future tax liabilities,
which arise mainly as a consequence of capital allowances in excess of
depreciation.
The adoption of FRS19 has resulted in a prior year adjustment, being a £161,000
reduction to the profit and loss account of 27 January 2001 and a £295,000
reduction at 29 January 2000. Earnings per share and taxation have been
restated for the 52 weeks ended 27 January 2001.
Interest
The net interest charge during the year increased from £0.2m to £0.5m,
reflecting an increased overdraft during the year as a result of the
infrastructure investment from the previous year and ongoing store development.
Shareholder return
Basic earnings per share (before the adoption of FRS19 deferred taxation)
increased by 11.2% to 15.9p, with restated earnings per share (adoption of FRS19
deferred taxation) increasing by 14.4% to 15.9p. free cash flow per share
increased from 10.8p to 22.1p.
Loan facility
During the year, the Group entered into a new loan facility of £4,000,000 with
its bank to cover anticipated financing requirements over the medium term. The
loan is repayable in annual stages expiring in December 2004.
The Group also entered into a fixed interest rate swap to match the profile of
the debt at a fixed rate of interest of 4.99% (excluding bank margin).
Cash Flow and Working Capital
Net cash flow from operating activities was £12.3 million (2001: £6.9m) which
reflects tight control over stock and debtor levels despite a significant
increase in the level of business activity and gave rise to a reduction in
working capital levels from £3.6m to £3.2m.
Net capital expenditure was £2.7million (2001: £5.2m) and largely comprised
investment in new retail outlets.
Treasury and Risk Management
The principal risks to the Group arise from exchange rate and interest rate
fluctuations. The Board reviews and agrees policies for managing these risks on
a regular basis. Where appropriate, the Group uses financial instruments to
mitigate these risks. All transactions in derivatives, principally forward
foreign exchange contracts, are taken solely to manage these risks. No
transactions of a speculative nature are entered into. The most significant
exposure to foreign exchange fluctuations relates to purchases in foreign
currencies.
The Group's policy is to hedge substantially all the risks of such currency
fluctuations by using forward contracts taking into account forecast foreign
currency cash inflows. There has been no change since the year-end to the major
financial risks faced by the Group or the Group's approach to the management of
those risks.
Accounting Standards
The Group has adopted Financial Reporting Standard 19 on deferred taxation and
consequently the comparative balance sheet has been restated to include a
deferred tax liability of £456,000 arising from timing differences on capital
allowances.
Lindsay Page
Consolidated profit and loss account
For the 52 weeks ended 26 January 2002
52 weeks 52 weeks
ended ended
26 January 27 January
2002 2001
Restated
Notes £'000 £'000
Turnover 2 62,095 46,999
Cost of sales 2 (27,166) (19,719)
---------- ----------
Gross profit 2 34,929 27,280
Other operating expenses (net) (24,974) (18,917)
---------- ----------
Operating profit 2 9,955 8,363
---------- ----------
Interest receivable 62 34
Interest payable (581) (242)
---------- ----------
Profit on ordinary activities before
taxation 3 9,436 8,155
Tax on profit on ordinary activities (2,942) (2,469)
---------- ----------
Profit on ordinary activities after taxation 6,494 5,686
Minority interest - equity 21 (13)
---------- ----------
Profit for the financial year 6,515 5,673
Dividends paid and proposed (3,220) (2,889)
---------- ----------
Retained profit for the period 3,295 2,784
====== ======
Earnings per share 4
Basic earnings per share 15.9p 13.9p
Diluted basic earnings per share 15.5p 13.4p
The profit for the current and prior period was entirely derived from continuing
activities. The accompanying notes are an integral part of this consolidated
profit and loss account.
There are no differences between the Company's historical cost profit and that
recorded in the profit and loss account (2001: £nil).
Restated
£'000 £'000
Statement of total recognised gains and losses
Profit on ordinary activities after taxation 6,494 5,686
Exchange rate movements (1) (4)
Prior year adjustment (456) (295)
---------- ----------
Total recognised gains relating to the year 6,037 5,387
====== ======
Consolidated balance sheet
At 26 January 2002
26 January 27 January
2002 2001
Restated
£'000 £'000
Fixed assets
Tangible assets 12,167 11,786
Investments 446 488
---------- ----------
12,613 12,274
---------- ----------
Current assets
Stocks 12,318 12,654
Debtors 5,711 5,838
Cash at bank 3,875 313
---------- ----------
21,904 18,805
Creditors: amounts falling due within one year (14,794) (18,660)
---------- ----------
Net current assets 7,110 145
---------- ----------
Total assets less current liabilities 19,723 12,419
Creditors: amounts falling due after more
than one year (4,000) -
---------- ----------
Net assets 15,723 12,419
====== ======
Capital and reserves
Called-up share capital 2,064 2,063
Other reserve 978 910
Profit and loss account 12,638 9,383
---------- ----------
Equity shareholders' funds 15,680 12,356
Minority interests - equity 43 63
---------- ----------
Total capital and reserves 15,723 12,419
====== ======
Consolidated cash flow statement
For the 52 weeks ended 26 January 2002
52 weeks 52 weeks
ended ended
26 January 27 January
2002 2001
Note £'000 £'000
Net cash inflow from operating activities 5 12,250 6,861
Returns on investments and servicing of
finance
- interest received 62 34
- interest paid (579) (210)
---------- ----------
(517) (176)
---------- ----------
UK corporation tax paid (2,705) (2,309)
Overseas tax paid (32) (11)
Capital expenditure and financial
investments 5 (2,651) (4,882)
Equity dividends paid (3,012) (2,741)
---------- ----------
Cash inflow/(outflow) before financing 3,333 (3,258)
Repayment of loan - (200)
Shares issued 30 -
Debt due after more than one year 4,000 -
---------- ----------
Increase/(decrease) in cash in the period 7,363 (3,458)
====== ======
Notes
1. Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the 52 weeks ended 26 January 2002 or 27 January 2001 but
is derived from those accounts. Statutory accounts for 2001 have been delivered
to the registrar of companies, and those for 2002 will be delivered following
the Company's annual general meeting. The auditors have reported on those
accounts; their reports were unqualified and did not contain statements under
section 237(2) or (3) of the Companies Act 1985. Further copies of the
financial statements will be available after that date from the Company
Secretary of Ted Baker PLC, The Ugly Brown Building, 6a St. Pancras Way, London
NW1 0TB. Copies of the financial statements can also be found online on our
investor relations site at http://ww2.investor-relations.co.uk/tedbaker/.
2. Segment information
The turnover and profit before taxation are attributable to the Group's
principal activity, the design, contracted manufacture, wholesale and retail of
high quality fashion clothing.
(a) Analysis of turnover
52 weeks 52 weeks
ended ended
26 January 27 January
2002 2001
£'000 £'000
Menswear 31,925 26,971
Womenswear 26,185 17,885
Other 3,985 2,143
-------- ---------
62,095 46,999
======== =========
(b) Classes of business - by divisional activity
i) 52 weeks ended 26 January 2002
Retail Wholesale Total
£'000 £'000 £'000
Turnover 41,715 20,380 62,095
Cost of sales (14,592) (12,574) (27,166)
-------- -------- --------
Gross profit 27,123 7,806 34,929
======== ========
Common operating costs (24,974)
--------
Operating profit 9,955
Net interest payable (519)
--------
Profit before taxation 9,436
========
Analysis of net assets
Net assets 12,320 3,082 15,402
Net financial assets 321
--------
15,723
========
ii) 52 weeks ended 27 January 2001
Retail Wholesale Total
Restated
£'000 £'000 £'000
Turnover 29,978 17,021 46,999
Cost of sales (9,773) (9,946) (19,719)
-------- -------- --------
Gross profit 20,205 7,075 27,280
======== ========
Common operating costs (18,917)
--------
Operating profit 8,363
Net interest payable (208)
--------
Profit before taxation 8,155
========
Analysis of net assets
Net assets 10,807 4,615 15,422
Net financial liabilities (3,003)
--------
12,419
========
c) Classes of business - by geographic origin
United
Kingdom Other Total
i) 52 weeks ended 26 January 2002 £'000 £'000 £'000
Turnover 61,144 951 62,095
Cost of sales (26,844) (322) (27,166)
-------- -------- --------
Gross profit 34,300 629 34,929
======== ========
Common operating costs (24,974)
--------
Operating profit 9,955
Net interest payable (519)
--------
Profit before taxation 9,436
========
Analysis of net assets
Net assets 14,966 436 15,402
Net financial assets 321
--------
15,723
========
United Other Total
Kingdom Restated
ii) 52 weeks ended 27 January 2001 £'000 £'000 £'000
Turnover 45,651 1,348 46,999
Cost of sales (19,067) (652) (19,719)
-------- -------- --------
Gross profit 26,584 696 27,280
======== ========
Common operating costs (18,917)
--------
Operating profit 8,363
Net interest payable (208)
--------
Profit before taxation 8,155
========
Analysis of net assets
Net assets 15,334 88 15,422
Net financial liabilities (3,003)
--------
12,419
========
Turnover outside the United Kingdom predominantly related to the United States.
Turnover by destination is not materially different from turnover by origin.
3. Profit on ordinary activities before taxation
52 weeks 52 weeks
ended ended
26 January 27 January
2002 2001
£'000 £'000
Depreciation and amounts written of owned tangible
fixed assets 2,319 1,832
Operating lease rentals 3,748 2,702
Trading Loss on Nigel Cabourn Ltd 262 -
Auditors remuneration for audit services 35 30
(Profit)/loss on sale of tangible fixed assets (2) 59
Amounts payable to KPMG for non-audit services 16 14
4. Earnings per share
Basic earnings per share is based on profit on ordinary activities after
taxation and minority interests for the period of £6,474,000 (2001: £5,620,000
- restated) and on 40,762,651 (2001: 40,520,401) ordinary shares of 5p each,
being the weighted number of ordinary shares outstanding.
Own shares held by the Ted Baker Group Employee Benefit Trust and the Ted Baker
1998 Employee Benefit Trust have been eliminated from the weighted average
number of ordinary shares. Dividend income received by the Company as a result
of holding these own shares £41,000 (2001: £53,000) has been eliminated from
the profit on ordinary activities after taxation and minority interests. The
options exercised during the year were of shares held by these Trusts.
Diluted earnings per share have been calculated using an additional 1,036,695
(2001: 1,491,212) ordinary shares of 5p each available under the 1997
Unapproved Share Option Scheme, the 1997 Executive Option Scheme and the Ted
Baker Performance Share Plan.
5. Consolidated cash flow statement
(a) Reconciliation of operating profit to operating cash flows
52 weeks 52 weeks
ended ended
26 January 27 January
2002 2001
£'000 £'000
Operating profit 9,955 8,363
Depreciation charges 2,319 1,832
(Profit)/loss on sale of tangible fixed
assets (2) 59
Decrease/(increase) in stocks 338 (4,188)
Decrease/(increase) in debtors 121 (2,595)
(Decrease)/increase in Creditors (481) 3,425
Decrease in provisions - (35)
--------- ---------
Net cash inflow from operating activities 12,250 6,861
========= =========
(b) Analysis of cash flows
Capital expenditure and financial investment
Purchase of tangible fixed
assets (2,741) (5,237)
Sale of tangible fixed assets 48 179
Sale of own shares 42 176
--------- ---------
Net cash outflow (2,651) (4,882)
========= =========
(b) Analysis of cash flows
Reconciliation of net cash flow to movement
in net debt
Increase/(decrease) in cash in the
period 7,363 (3,458)
Net debt at start of period (3,491) (33)
--------- ---------
3,872 (3,491)
--------- ---------
Exchange rate movement 3 -
Debt due after more than one year (4,000) -
--------- ---------
Net debt at end of period (125) (3,491)
========= =========
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