Ted Baker crashes 25% as High Street price war batters profits after "hug-gate" scandalComments Off on Ted Baker crashes 25% as High Street price war batters profits after "hug-gate" scandal
THE woes at Ted Baker deepened today when the fashion house issued a profit warning that sent shares down 25%.
Baker has been buffeted by the “hug-gate” scandal which saw founder and chief executive Ray Kelvin forced to quit in March after allegations of misconduct, including “forced hugging” of staff.
Today the company said it had faced “extremely difficult trading conditions”, some of which will “continue to impact trade… across the remainder of the financial year”.
In particular, Ted has been hit by deep discounting from rivals in the High Street as the retail sector fights for survival. It has been forced to follow suit, hurting margins.
That means profits for the year will be between £50 million and £60 million rather than the £70 million expected by the City until this morning. The stock plunged 346p to 999p, the lowest for seven years. Kelvin, as the biggest shareholder with 35%, saw the value of his stake fall more than £50 million.
Broker Liberum insists shares are a Buy and hints Ted could now be a takeover target. “It is likely speculation will rise considering the market capitalisation being so low”, it told clients.
Lindsay Page, a long-standing executive given the job of replacing Kelvin, insists Ted Baker “remains an outstanding brand” which is well placed to “adapt to structural changes” in retail.
For now though it is seeking “cost efficiencies as well as further cost savings throughout the business”. Page admitted to “some challenges” with its spring/summer collection but said they have “been properly addressed”.
Peel Hunt said today’s announcement was “no ordinary profit warning”, saying the scale of it “will raise eyebrows”.
The broker said: “Though these issues have been brewing for some time… there will be questions around Kelvin’s departure and the wider question of how to get Ted back on point.”
Kelvin, a mercurial if somewhat eccentric figure, said when he resigned that the company had been his “life and soul”. Late last year staff launched an online petition accusing him of harassment, including asking them to sit on his knee and cuddle him. Kelvin denied the allegations.