RNS Number:8639W
Ted Baker PLC
24 March 2004
24 March 2004
Ted Baker PLC
Preliminary Results for the 53 weeks ended 31 January 2004
Highlights
* Group turnover up by 26.6% to #88.8m (2003: #70.2m)
- Retail sales up 25.7% to #61.3m (2003: #48.8m)
- Wholesale sales up 28.7% to #27.5m (2003: #21.4m).
- Licence income up 25.0% to #2.5m (2003, 52 weeks: #2.0m)
* Profit before tax up 26.0% to #13.9m (2003: #11.0m, before one off
charges) and up 46.6% compared to profit before tax after one off
charges (2003: #9.5m)
* Basic earnings per share up 42.8% at 22.7p per share (2003: 15.9p
per share)
* Adjusted basic earnings per share up 22.0% at 22.7p per share (2003:
18.6p per share)
* Final dividend of 6.4p per share, making a total for the year of
9.6p, an increase of 10.3% (2003: 8.7p per share)
* Closing net funds of #5.8m compared to opening net debt of #1.2m
Commenting on the results, Ray Kelvin, Chief Executive, said:
"I am proud to announce anotheryear of success for the Ted Baker brand as we
continue to manage carefully our international expansion whilst maintaining the
unique Ted ethos. Our excellent financial results are testimony to the
continued appeal of our collections and the fantastic teams at Ted who make it
all happen. I am also delighted to announce the imminent opening of Ted's
revolutionary "Endurance" store in Covent Garden. This store will showcase the
"Endurance" collection and will introduce Ted's new and innovative approach to
the experience of selecting a suit."
Enquiries:
Ted Baker Tel: 020 7796 4133 on 24 March 2004 only
Ray Kelvin, Chief Executive thereafter Tel: 020 7255 4800
Lindsay Page, Finance Director
Hudson Sandler Tel: 020 7796 4133
Noemie de Andia / Sandrine Boussard
Visit Ted's award winning e-commerce site at www.tedbaker.co.uk and click on
'Visit Ted's World' to be taken to our investor relations website.
Notes to Editors
Ted Baker is a leading UK fashion brand for men and women with three distinct
distribution channels: retail, wholesale and licensing. We pursue a policy of
careful brand management and growth by extending the breadth of our collections,
controlling our three distribution channels and developing our presence in key
overseas markets, especially the United States. We do not advertise but rather
support our brand profile by opening stores in selected retail locations and
cultivating the unique personality of our brand and unrivalled attention to
detail in our collections. Our innovative stance is best illustrated by the
successful development of the "Endurance" suits collection which uses high
performance fabrics and cutting edge designs perfectly adapted to the Ted Baker
customers' demanding lifestyles.
CHAIRMAN'S STATEMENT
I am delighted to report another set of very strong financial results for Ted
Baker. During the year wemade excellent progress in following our brand
development strategy. That strategy is based on three main elements: considered
expansion of our collections; controlled distribution through three main
channels - retail, wholesale and licensing; and carefully managed development of
overseas markets. I would like to thank everyone at Ted Baker for another
successful year for our business.
I am pleased to announce that we have extended the initial period of our licence
agreement with Hartmarx Corporation Inc. ("Hartmarx") by three years to 31
December 2008. Hartmarx has committed to further guaranteed minimum licence
income of $6.6m over this period.
Results
Group turnover increased by 26.6% to #88.8m (2003: #70.2m) for the 53 weeks
ended 31 January 2004. Operating profit increased by 24.4% to #14.3m (2003:
#11.5m, before one off charges) and by 43.9% compared to operating profit
including one off charges (2003: #9.9m). Profit before tax increased by 26.0%
to #13.9m (2003: #11.0m, before one off charges) and by 46.6% compared to profit
before tax including one off charges (2003: #9.5m). Adjusted basic earnings per
share increased by 22.0% to 22.7p per share (2003: 18.6p per share) and by 42.8%
compared to basic earningsper share (2003: 15.9p per share).
Dividends
The Board is pleased to recommend a final dividend of 6.4p per share (2003:
5.8p) making a total for the year of 9.6p (2003: 8.7p) an increase of 10.3% over
the previous year. The final dividend willbe payable on 25 June 2004 to those
shareholders on the register on 21 May 2004.
Current Trading
We have made a good start to the new financial year with total retail sales
ahead by 8.4% for the first seven weeks, compared with the same period last
year. Wholesale sales are 97.5% ahead, mainly reflecting earlier phasing of
deliveries. We remain confident of another successful year for the growth and
development of our brand.
Robert Breare
Non-Executive Chairman
CHIEF EXECUTIVE'S REVIEW
Strategy
I am pleased to report another strong year for the Ted Baker brand as we
continue carefully to manage our expansion both in the UK and overseas. Our
excellent financial results demonstrate the continued success of our
collections. We successfully opened our second largest store to date at the
Shambles in Manchester and launched our exclusive "Global" collection for men in
September 2003. We continue to make good progress in developing the brand in
the US, both through our own retail stores and with our licencee, Hartmarx.
Retail
The retail division performed very strongly during the year as we continued to
adapt our store portfolio to accommodate our broader range of collections.
Retail sales grew by 25.7% to #61.3m (2003: #48.8m). The average retail square
footage rose by 30.0% over the period to 98,888 sq. ft. (2003: 76,091 sq. ft.).
At 31 January 2004, total retail square footage was 103,787 sq. ft. (2003:
91,813 sq. ft.) representing an increase of 13.0%.
Sales per square foot decreased from #641 to #620 reflecting in particular the
opening of larger than average stores where sales per square foot are lower. UK
sales per square foot increased by 1.5% from #668 to #678.
At 31 January 2004, the retail division consisted of 87 retail locations
comprising 18 UK stores, 4 overseas stores, 59 concessions and 6 outlet stores.
We have relocated two stores in Manchester to the Shambles development and in
London we closed two stores, and opened in the Duke of York's Square development
on the Kings Road. We opened 16 concessions in leading department stores and an
outlet store in Bicester Village.
In the United States both New York and San Jose exceeded ourexpectations but
our Miami store performed below expectations due to the delayed development and
immaturity of the centre in which it is located. In Europe, our store in Paris
continued to perform in line with expectations.
Wholesale
The development of the wholesale division is a key element of the low-risk
expansion strategy of the Group. This division performed very strongly as we
continued to add new trustees and sell new collections to existing trustees.
Sales from the wholesale division rose by 28.7% to #27.5m (2003: #21.4m). This
result reflects the continued success of our established collections, Ted Baker,
Ted Baker Woman and Endurance, as well as the development of more recent
collections including Ted Baker Jean, Accessories, Childrenswear and Homewear.
Licence Income
Licence income increased by 25% to #2.5m (2003, 52 weeks: #2.0m) reflecting the
continued development of our product and territorial licences.
Hartmarx continued to expand and develop the US wholesale business. The Ted
Baker brand is now stocked by top independent stores and leading department
stores such as Bloomingdales, Nordstrom and Parisien. We remain confident of
the long term prospects of the brand in the US and to this end have extended the
initial term of our licence agreement with Hartmarx for a further three years to
31 December 2008. In return Hartmarx has guaranteed minimum licence income for
this period amounting to $6.6m. Two renewal periods, each of three years, are
subject to Hartmarx achieving certain performance criteria.
Pentland Group PLC, our shoe licencee, had another excellent year, again
exceeding our expectations. Our fragrance licencee, Knowledge Merchandising
Inc. Ltd. (KMI), made good progress during the year and our watch licence with
Zeon Ltd. saw growth ahead of our expectations.
Our original licence for opthalmics and sunglasses expired in the summer and was
not renewed. We have since appointed Mondottica Limited to this licence and are
very pleased with the progress made to date.
The territorial licence for Australia and New Zealand, which we announced last
year, had no financial impact on this year. We are very encouraged by the early
success of the launch of the brand in 2004.
Collections
Menswear turnover increased by 27.2% to #45.7m (2003: #35.9m) and Womenswear
grew by 19.9% to #36.4m (2003: #30.4m) as we continued to extend the breadth of
our ranges. Other collections contributed turnover of #6.7m (2003: #3.8m),
which represented an increase of 74.2%. This underlying growth particularly
reflects the success of our more recently launched Childrenswear and Footwear
collections.
Outlook
The current year has started well and we have very exciting brand development
opportunities in prospect. In the UK we have opened a new store in Stansted
airport (March 2004) and plan to open two more stores in Guildford and
Westbourne Grove (London) in the first half of the year. We expect to relocate
our existing Nottingham stores to one larger location during the second half of
the year.
Overseas, we are delighted to announce that we have recently secured an
excellent retail location in Union Square, San Francisco, which we expect to
open during thesecond half of the year. We continue to consider other
opportunities in the US.
Perhaps most exciting of all is the imminent launch of our revolutionary "
Endurance" store in Covent Garden. This store will showcase the successful "
Endurance" collection and will introduce Ted's new and innovative approach to
the experience of selecting a suit.
Ray Kelvin
Chief Executive
FINANCE DIRECTOR'S REPORT
The financial results reflect our continued focus on margin led growth and
strong cash management. Our net margin before taxation and before exceptional
charges was maintained at 15.7% and opening net debt of #1.2m improved to
closing net funds of #5.8m.
The provision of #1.6m made last year to cover the closure and relocation of a
number of retail stores proved adequate and there has been no material effect on
the profit and loss account in the period.
Gross Margin
Composite retail gross margins reduced slightly to 66.7% (2003: 66.9%)
reflecting the effect of the overseas stores that were open for the whole year
and which recorded a slightly lower margin. In the UK, retail gross margins
remain stable at 67.0% (2003: 67.0%) having absorbed the effect of opening the
additional outletstore in the first half. The composite wholesale gross margin
decreased to 43.1% (2003: 43.4%) reflecting changes in the product mix.
The reductions in the composite retail and wholesale gross margins reduced the
composite gross margin to 59.4% (2003: 59.7%). We anticipate a further increase
in overseas retail sales as a proportion of the total, giving rise to a small
decrease in the composite retail gross margin in the current year.
Operating Expenses
Operating expenses rose by 25.9% to #41.2m (2003: #32.7m, before one off
charges) and 20.2% compared to operating expenses including one off charges
(2003: #34.3m). Distribution costs, which include the costs of new retail
stores, outlets and concessions increased by 27.1% to #30.0m (2003: #23.6m)
which was less than the 30% increase in average retail selling space.
Administration expenses rose by 22.7% to #11.2m (2003: #9.1m) reflecting
continued investment in our team and in the development of our infrastructure.
Interest
The net interest charge during the year remained at comparable levels to last
year at #0.4m (2003: #0.4m).
Taxation
The tax charge for the year was #4.3m (2003: #3.0m), an effective tax rate of
31.1% (2003: 32.0%).
Shareholder Return
Adjusted basic earnings per share increased by 22.0% to 22.7p per share (2003:
18.6p per share) and by 42.8% compared to basic earnings per share (2003: 15.9p
per share). Free cash flow per share increased 18.9% from 24.3p to 28.9p.
Cash Flow and Working Capital
Net cash inflow from operating activities was #16.5m (2003: #13.6m) primarily
reflecting increased trading and continued tight cash management. Working
capital was tightly controlled and only increased from #4.3m to #4.5m despite
the growth of the business.
Capital expenditure was #4.1m (2003: #7.9m) and largely comprised investment in
new retail stores. During the year we re-negotiated our lease at Floral Street,
Covent Garden resulting in a #2.0m cash inflow.
Net cash inflow from financing was #0.9m (2003: #0.2m) reflecting the issue of
shares in support of employee share option schemes.
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 therisks 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.
Lindsay Page
Finance Director
Consolidated Profit and Loss Account 53 weeks 52 weeks
For the 53 weeks ended 31 January 2004 ended ended
31 January 25 January
2004 2003
Notes #000 #000
Turnover 2 88,842 70,188
Cost of sales 2 (36,088) (28,252)
Gross profit 2 52,754 41,936
Other operating expenses (net) before impairment (38,494) (30,475)
Impairment of fixed assets - (1,551)
Other operating expenses (net) 3 (38,494) (32,026)
Operating profit 2 14,260 9,910
Interest receivable 31 55
Interest payable (382) (480)
Profit on ordinary activities before taxation 2, 4 13,909 9,485
Tax on profit on ordinary activities (4,333) (3,033)
Profit on ordinary activities after taxation 9,576 6,452
Minority interest - equity 3 104
Profit for the financial year 9,579 6,556
Dividends paid and proposed (4,066) (3,600)
Retained profit for the period 5,513 2,956
Earnings per share 5
Basic earnings per share 22.7p 15.9p
Adjusted basic earnings per share 22.7p 18.6p
Diluted earnings per share 22.2p 15.6p
Statement of total recognised gains and losses
For the 53 weeks ended 31 January 2004
#000 #000
Profit for the financial year 9,579 6,556
Exchange rate movement (283) 34
Total recognised gains relating to the year 9,296 6,590
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 (2003: #nil).
A statement on movements on reserves is given in note 8. The profit from the
current and previous periods were entirely derived from continuing activities.
Consolidated Balance Sheet 31 January 25 January
At 31 January 2004 2004 2003
Notes #000 #000
Fixed assets
Tangible assets 14,410 15,375
Investments 896 349
15,306 15,724
Current assets
Stocks 17,321 13,937
Debtors 7,054 6,975
Cash at bank and in hand 9,811 2,778
34,186 23,690
Creditors: amounts falling due within one year (19,384) (16,456)
Net current assets 14,802 7,234
Total assets less current liabilities 30,108 22,958
Creditors: amount falling due after more than one year (4,000) (4,000)
Provisions for liabilities and charges (480) (123)
Net assets 25,628 18,835
Capital and reserves
Called-up share capital 8 2,131 2,072
Share premium account 8 5,358 1,412
Profit and loss account 8 18,200 15,411
Equity shareholders' funds 25,689 18,895
Minority interests - equity 8 (61) (60)
Total capital and reserves 25,628 18,835
CONSOLIDATED CASHFLOW STATEMENT 53 weeks 52 weeks
For the 53 weeks ended 31 January 2004 ended ended
31 January 25 January
2004 2003
Notes #000 #000
Net cashinflow from operating activities 6 16,488 13,632
Returns on investments and servicing of finance
Interest received 19 55
Interest paid (367) (502)
Net cash outflow from returns on investment and
servicing of finance (348) (447)
Taxation
UK corporation tax paid (3,843) (3,215)
Capital expenditure and financial investment 7 (1,915) (7,949)
Equity dividends paid (3,743) (3,313)
Cash inflow/(outflow) before financing 6,639 (1,292)
Financing
Shares issued 1,564 225
Shares purchased (694) -
Sale of own shares 7 -
Net cash inflow from financing 877 225
Increase/(decrease) in cash in the period 7 7,516 (1,067)
Notes
1. Basis of preparation
The financial information set out above does not constitute the Company's
statutory accounts for the 53 weeks ended 31 January 2004 or 52 weeks ended 25
January 2003 but is derived from those accounts. Statutory accounts for 2003
have been delivered to the registrar of companies, and those for 2004 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 the annual
general meeting 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
www.tedbaker.co.uk .
2. Segment information
The turnover and profit before taxation are attributable to the Group's
principal activities, the design and contracted manufacture of high quality
fashion clothing for wholesale and retail customers.
a) Analysis of turnover 53 weeks 52 weeks
ended ended
31 January 25 January
2004 2003
#000 #000
Turnover by brand
Menswear 45,709 35,942
Womenswear 36,438 30,402
Other 6,695 3,844
88,842 70,188
b) Classes of business - by divisional activity
i) 53 weeks ended 31 January 2004 Inter-
Retail Wholesale Company Total
#000 #000 #000 #000
Turnover 61,321 28,433 (912) 88,842
Cost of sales (20,415) (16,504) 831 (36,088)
Gross profit 40,906 11,929 (81) 52,754
Common operating costs (38,494)
Operating profit 14,260
Net interest payable (351)
Profit before taxation 13,909
Analysis of net assets
Net assets 15,015 3,906 - 18,921
Net financial assets 6,707
25,628
ii) 52 weeks ended 25 January 2003 Inter-
Retail Wholesale Company Total
#000 #000 #000 #000
Turnover 48,798 22,023 (633) 70,188
Cost of sales (16,137) (12,665) 550 (28,252)
Gross profit 32,661 9,358 (83) 41,936
Common operating costs (30,475)
Impairment of fixed assets (1,551)
Operating profit 9,910
Net interest payable (425)
Profit before taxation 9,485
Analysis of net assets
Net assets 15,738 3,970 - 19,708
Net financial liabilities (873)
18,835
c) Classes of business - by geographic origin United Inter-Company
i) 53 weeks ended 31 January 2004 Kingdom Other #000 Total
#000 #000 #000
Turnover 86,562 3,192 (912) 88,842
Cost of sales (35,705) (1,214) 831 (36,088)
Gross profit 50,857 1,978 (81) 52,754
Common operating costs (38,494)
Impairment of fixed assets -
Operating profit 14,260
Net interest payable (351)
Profit before taxation 13,909
Analysis of net assets
Net assets 21,236 (2,315) - 18,921
Net financial assets 6,707
25,628
United Other Inter-Company Total
Kingdom
ii) 52 weeks ended 25 January 2003
#000 #000 #000 #000
Turnover 69,342 1,479 (633) 70,188
Cost of sales (28,194) (608) 550 (28,252)
Gross profit 41,148 871 (83) 41,936
Common operating costs (30,475)
Impairment of fixed assets (1,551)
Operating profit 9,910
Net interest payable (425)
Profit before taxation 9,485
Analysis of net assets
Net assets 20,085 (377) - 19,708
Net financial liabilities (873)
18,835
Other includes sales arising mainly in the United States. Turnover by
destination is not materially different from turnover by geographic origin.
3. Other operating expenses (net)
53 weeks 52 weeks
ended ended
31 January 25 January
2004 2003
#000 #000
Distribution costs 30,044 23,644
Administrative expenses 11,169 9,102
Impairment of fixed assets - 1,551
Administrative expenses including impairment of fixedassets 11,169 10,653
Other operating income (2,719) (2,271)
Other operating expenses (net) 38,494 32,026
4. Profit on ordinary activities before taxation
53 weeks 52 weeks
ended ended
31 January 25 January
2004 2003
#000 #000
Profit on ordinary activities before taxationis stated after charging:
Depreciation and amounts written off owned tangible fixed assets 3,285 3,093
Operating lease rentals 5,485 4,482
Auditors' remuneration for audit services 34 34
Auditors' remuneration for non-audit services 7 6
Loss on sale of fixed assets - 9
Impairment of fixed assets - 1,551
Amounts payable to KPMG Audit Plc in respect of non-audit services relate to
review work associated with the interim statement.
5. Earnings per share
53 weeks 52 weeks
ended ended
31 January 25 January
2004 2003
No. No.
Number of shares:
Weighted number of ordinary shares outstanding 41,909,936 40,994,540
Effect of dilutive options 927,015 889,034
Weighted number of ordinary shares outstanding - diluted 42,836,951 41,883,574
Earnings: #000 #000
Profit for the financial year 9,579 6,556
Less: dividends on own shares (67) (40)
Profit - basic and diluted 9,512 6,516
One off charges - 1,551
Taxation impact of one off charges - (451)
Profit - adjusted 9,512 7,616
Basic earnings per share 22.7p 15.9p
Adjusted basic earnings per share 22.7p 18.6p
Diluted earnings per share 22.2p 15.6p
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 has been eliminated from the profit on ordinary
activities after taxation and minority interests. The options exercised during
the year and long-term incentive scheme awards distributed were of shares held
by these Trusts.
Diluted earnings per share have been calculated using additional ordinary shares
available under the 1997 Unapproved Share Option Scheme, the 1997 Executive
Share Option Scheme and the Ted Baker Performance Share Plan.
One off charges in the 52 weeks ended 25 January 2003 relate to the impairment
of fixed assets (#1,551,000).
6. Reconciliation of operating profit to operating cash flows
53 weeks 52 weeks
ended ended
31 January 25 January
2004 2003
#000 #000
Operating profit 14,260 9,910
Impairment of fixed assets - 1,551
Depreciation charges 3,285 3,093
Loss on sale of tangible fixed assets - 9
Decrease in own shares 140 97
Increase in stocks (3,435) (1,654)
Decrease/(increase) in debtors 264 (1,135)
Increase in creditors 1,974 1,761
Net cash inflow from operating activities 16,488 13,632
7. Analysis of cashflows
53 weeks 52 weeks
ended ended
31 January 25 January
2004 2003
#000 #000
a) Capital expenditure and financial investment
Purchase of tangible fixed assets (4,131) (7,949)
Sale of tangible fixed assets 2,216 -
Net cash outflow (1,915) (7,949)
b) Reconciliation of net cashflow to movement in net funds/(debt)
Increase/(decrease) in cash in the period 7,516 (1,067)
Net debt at start of period (1,222) (125)
6,294 (1,192)
Exchange rate movement (483) (30)
Net funds/(debt) at end of period 5,811 (1,222)
c) Analysis of net funds/(debt) At 25 January Exchange rate At 31 January
2003 Cashflow movement 2004
#000 #000 #000 #000
Cash at bank and in hand 2,778 7,516 (483) 9,811
Debt due after more than one year (4,000) - - (4,000)
(1,222) 7,516 (483) 5,811
8. Share Capital and Reserves
Share Share Profit and Minority
Capital Premium loss account Interests
#000 #000 #000 #000
At 25 January 2003 2,072 1,412 15,411 (60)
Retained profit for the period - - 5,513 (3)
Shares issued 59 3,946 (2,441) -
Exchange rate movement - - (283) 2
At 31 January 2004 2,131 5,358 18,200 (61)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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