Where next for Ted Baker plc after today’s trading update?

Could Ted Baker plc (LON:TED) (TED.L) offer investment potential?

Ted Baker
Ted Baker

The Ted Baker plc (LON:TED) (TED.L) share price has risen by around 5% so far today after the company released a trading statement for the 16 weeks to 1 December 2018.

Revenue decreased by 0.4% during the period when compared to the same period of the previous year. This reflects the expected decline in wholesale sales as a result of the timing of deliveries, which was largely offset by the company’s retail sales performance.

The business has experienced challenging trading conditions across its markets. Unseasonal weather at the start of the period impacted on trading in the UK, Europe and the East Coast of the US. In the UK, well-publicised challenges facing the company’s trading partners have also impacted on its performance.

Ted Baker’s total retail sales including e-commerce increased by 2.1% at constant currency. Average retail square footage rose by 5.2%, while e-commerce sales increased by 18%. They are becoming an increasingly important part of the business, and now represent 30.3% of total retail sales.

During the last eight weeks of the period, total retail sales increased by 4% as the weather returned to being more in keeping with the season. Wholesale sales, though, declined by 7% in constant currency. This was anticipated and was due to the earlier timing of wholesale deliveries in the first half of the year. The company continues to expect mid to high single-digit wholesale sales growth for the full year.

In my opinion, the near-term outlook for Ted Baker could be relatively uncertain. It faces continued challenges in key markets, and this could keep its share price performance pegged back. In the long run, though, I feel that it has a strong brand and exposure to fast-growing markets across the world. Therefore, I’m optimistic about its investment potential over future years, but there could be continued volatility ahead in my opinion.

About Robert Stephens 5430 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email info@investomania.co.uk or use one of the other contact methods available on the 'Contact Us' page