TED Ted Baker Plc

TIDMTED

RNS Number : 4891C

Ted Baker PLC

23 February 2022

23 February 2022

   Ted Baker Plc   ("Ted Baker", the "Group") 

Q4 2022 / Pre-close trading update

For the 12-week period from 7 November 2021 to 29 January 2022 ("the Period")

Accelerating sales growth with significant improvement in full price mix. Net cash achieved at year-end and FY23 targets reconfirmed

Ted Baker Plc, the global lifestyle brand, today provides an update on trading for the 12 week period from 7 November 2021 to 29 January 2022. All figures in the text refer to 12 week versus 12 week comparison, given the 53(rd) week last year.

Q4 Highlights

   1.    Accelerating sales growth, with sequential improvement, despite Omicron headwinds 

o Group sales growth of 35% compared to Q4 FY2021, increased from 18% reported at Q3

o Compared to Q4 pre-pandemic levels, Retail sales were running at -10% before Omicron warnings, falling to -42% during the Omicron surge

o Group successfully navigated the global supply chain disruptions with some modest impact on product availability

   2.    Brand strength supporting improving trading margin 

o Trading margin improved over 350 bps across all channels

o Across H2, full price sales mix is up over 800 bps, re-establishing our premium brand positioning

o Inventory levels clean at year-end as Group has maintained tight stock discipline

   3.    Positive Net Cash and strong liquidity 

o Net Cash at year end is positive GBP3.0m, in line with previously upgraded guidance

o Strong liquidity with bank facilities of GBP80m in place

   4.    For the year ahead, continuing confidence in reconfirmed FY23 targets 

o Reconfirming financial targets set as part of Transformation plan in spring 2020

o GBP30m Free Cash Flow and EBITDA margin (pre IFRS16) of 7-10% anticipated for fiscal 2023

   5.    Encouraging response to new collections 

o Womenswear AW21 collections performed well against the target product pyramid, with strong sales across bags, footwear and tops

o Performance on Menswear more mixed, with sales over-indexing on core and continuity product, with strong performance on footwear. We take key learnings into the SS22 collections

   6.    Brand partnerships growing further 

o The Group has signed a new franchise agreement in the UK, with plans for at least three new store locations per year over the next three years

o We have expanded our successful home and bedding product licence with Bedeck to include North America, making it a global licence agreement starting July 2022. We have also extended our Jack Victor licence for North America for a further five years

   7.    Continued progress on ESG targets 

o Continued progress with our Fashioning a Better Future Programme. We achieved a strong improvement in sustainable materials across all our collections for the year to 26%, up from 17% last year

   8.    Good progress on search for a new Chair 

o The Group is making good progress on recruiting for a new Chair, with the search process well underway

Rachel Osborne, Chief Executive Officer, commented:

" We continue to make good progress with our transformation and despite the impact of Omicron on the quarter, were pleased to deliver Group sales up 35% compared with last year. The strong improvement in trading margin is encouraging, along with the increase in full price sales mix, demonstrating the progress we're making as Ted re-establishes its premium brand positioning.

Our product is resonating with customers and we were particularly pleased with the performance of Womenswear, with bags, footwear and tops all selling well, and a strong initial reaction to the Spring/Summer 2022 collection. Ted is emerging from Covid a stronger more sustainable business and we're excited for the future."

 
              Comparable   Reported    Reported vs.   Wk 41-46    Wk 47-52 vs. 
               12wk vs.     vs. LY *    LY-1 **        vs. LY-1    LY-1 
               1 2wk LY     12wk vs.    12wk vs. 1 
                            13wk LY     2wk LY-1 
 G roup       +35.2%       +28.3%      -28.6% 
             -----------  ----------  -------------  ----------  ------------- 
 Retail       +36.5%       +30.7%      -29.5%         -9.6%       -41.5% 
             -----------  ----------  -------------  ----------  ------------- 
 Stores       +90.4%       +86.0%      -43.2%         -24.1%      -52.9% 
             -----------  ----------  -------------  ----------  ------------- 
 eCom         +2.1%        -3.4%       -0.9%          +13.9%      -12.4% 
             -----------  ----------  -------------  ----------  ------------- 
 Wholesale    +27.8%       +18.0%      -27.9% 
             -----------  ----------  -------------  ----------  ------------- 
 Licence      +52.5%       +40.8%      -9.5% 
             -----------  ----------  -------------  ----------  ------------- 
 

*% change in revenue on reported basis. LY figure includes 13(th) week

** LY-1 reflects performance before impact of COVID-19

Q4 financial and operational highlights:

-- Recovery was encouraging at the start of Q4, with total retail showing best relative performance vs pre-COVID levels. Several store groups and categories were showing growth compared to pre-COVID. The Group saw a material step-down in demand during the Omicron surge from mid December.

-- Retail sales growth rates were adversely affected by seven percentage points due to change in operating model relating to our Japanese and Chinese business moving from Retail to Licence and JV and from House of Fraser moving to Wholesale. These actions were strategic decisions made by the business to improve ROCE and drive capital light growth.

-- Our strategic decision to re-establish our premium positioning has meant moving away from the aggressive promotional stance of prior years. While this has lowered sales growth rates, it has delivered better trading margin and is building a stronger business long term. The Group will continue to prioritise improving our full price sales mix.

-- Footfall has remained a challenge during the period, especially during the Omicron surge. However, we have started to see positive signs across travel retail as customers have started to return to foreign travel.

-- Several of our product licence partners have seen strong momentum in their business. Eyewear remains a standout category for the Group. We have been pleased with the initial customer response to newer licenced product from Baird and Next.

-- Retail trading margin improved by over 200 basis points vs Q4 FY2021 and in line with vs Q4 FY2020 as the Group prioritised its full price trading stance.

-- The Group has made further progress on increasing the variable nature of rents and reducing lease length throughout the year, which will impact IFRS16 adjustments in FY2023 and beyond .

Investor Event focused on Brand, Customer and Product

Ted Baker Plc, the global lifestyle brand, will today host an investor event focussed on Brand, Customer and Product. The event will cover progress against Ted Baker's transformation plan to refresh and re-energise the brand.

Rachel Osborne, CEO said:

"We now have a much deeper understanding of our customers and our brand, including what they love about Ted Baker and where they see room for improvement. Building on this, we have been working hard to re-energise our product and our brand, and I am excited to share more detail on our progress to date in the UK, and in our key strategic markets of Germany and the US."

No new material disclosures will be made during the event . The video of the event and the presentation materials will be available on the Ted Baker Investor Relations website after the event has concluded. For more information on attending please contact TedBaker@tulchangroup.com .

Ted Baker will announce its results for the 52-week period ended 29 January 2022 and Q1 trading update on 26 May 2022.

The Group will host a conference call for analysts and investors to discuss this announcement at 8.15am today. Dial-in details are as follows:

   UK   +44 330 336 9601 

Passcode: 2526727

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February 23, 2022 02:00 ET (07:00 GMT)