House of Fraser woes and extreme weather take toll on Ted Baker
The retailer said pre-tax profits fell 3.2% to £24.5 million in the six months to August 11.
Fashion chain Ted Baker has become the latest fashion firm to reveal a hit from beleaguered department store chain House of Fraser as it posted lower half-year profits.
The retailer said pre-tax profits fell 3.2% to £24.5 million in the six months to August 11, with the group writing off £600,000 owed by House of Fraser, which collapsed into administration in August and has since been bought by Sports Direct.
Ted Baker saw UK and European retail sales growth slow sharply to 1%, or 0.7% with exchange movements stripped out, as the House of Fraser woes and extreme weather took its toll.
Trading in the UK has been impacted by the well-publicised challenges facing some of our trading partners Ted Baker
High street store sales plummeted 10.4% per square foot in constant currency, although this was offset by a 22.9% jump in online sales.
The group said sales were hurt in particular by dismal trading in its House of Fraser concessions leading up the department store’s collapse, as well as the “unseasonable weather” in the half-year.
It also warned that hotter-than-usual weather across the UK, Europe and East Coast of America had affected trading in September.
“In addition, trading in the UK has been impacted by the well-publicised challenges facing some of our trading partners,” it added.
Its results show that on an underlying basis and with one-off costs such as the House of Fraser hit stripped out, pre-tax profits rose 3.5%, to £25 million.
Group sales lifted 3.5% or 5.5%, on a constant currency basis, to £306 million thanks to a better performance in its wholesale and licence businesses – with revenues up 12.8% and 11.7% respectively.
It also said it remained committed to the beleaguered UK high street as it stuck by plans to open another two stores in Britain, as well as concessions.
While online sales now account for 29% of UK and European retail revenues, the group said its stores “remain key to the success of the e-commerce business through initiatives such as order in store, click and collect, as well as showcasing the brand”.
Ray Kelvin, founder and chief executive of Ted Baker, said: “Ted Baker has continued to develop and expand as a global lifestyle brand across its markets and distribution channels despite challenging external trading conditions.”
He added: “Whilst we believe that the second half of the year will remain challenging due to external factors, we are well-positioned to continue Ted Baker’s long-term development.”