TIDMTED
RNS Number : 5524T
Ted Baker PLC
21 July 2020
21 July 2020
Ted Baker Plc ("Ted Baker" or the "Company")
AGM Trading Update
For the 11 week period from 3 May 2020 to 18 July 2020 ("the
period")
Resilient trading and good progress despite COVID19
disruption
Ted Baker Plc, the global lifestyle brand, today provides an
update on trading for the 11 week period from 3 May 2020 to 18 July
2020, ahead of the Company's Annual General Meeting taking place
this morning.
Key Highlights
-- Group trading has been resilient, with a particularly strong
performance online, as the Group has taken a more dynamic trading
stance since the beginning of the year, reflecting more
sophisticated cross-category merchandising, refreshed social media
activity and increased marketing spend.
-- Following the launch of Ted's Formula for Growth, our
three-year transformation plan, we are pleased with the good
progress and momentum made on all the key operational and financial
milestones for FY21.
-- Net cash as of July 11 was GBP56.7m, ahead of management
expectations due to strong cash management.
Financial Results
11 weeks to Reported variance Constant currency
18 July 2020 year-on-year variance(1)
Group revenue GBP60.9m (55%) (55%)
--------------- ------------------ ------------------
Retail GBP51.0m (50%) (50%)
--------------- ------------------ ------------------
Stores GBP15.8m (79%) (79%)
--------------- ------------------ ------------------
E-commerce GBP35.2m 35% 34%
--------------- ------------------ ------------------
Wholesale GBP7.4m (75%) (76%)
--------------- ------------------ ------------------
Licence Income GBP2.5m (29%) (29%)
--------------- ------------------ ------------------
Good progress against Ted's Formula for Growth
Ted's Formula for Growth, our three-year transformation plan, is
designed to deliver a structurally more profitable business, with
higher ROCE and higher sustainable free cash flow generation.
The business has made a strong start on the specific strategic
targets set for FY23 of:
-- 5% medium term revenue growth
-- EBITDA margin of 7-10% by YE2023
-- At least GBP30m annual free cash flow by YE2023
-- Net debt/EBITDA of 1x or lower by YE2023
As measures of progress towards the three-year financial
targets, for the first year of the turnaround plan the Company set
planned strategic progress markers, including:
-- Structural bought in margin improvement
-- Continued focus on working capital efficiency
-- Reduced expenditure
-- Improved retail store profitability
-- Increased controls
Against each of these markers good progress has been made:
-- Structural bought in margin improvement: SS21 collection will
be sourced from fewer than 100 suppliers (previously over 150
suppliers) providing more concentrated negotiating power and buying
efficiency.
-- Enhanced working capital efficiency: the stock buying cycle
has been tightened from three years to two years, implemented for
AW20, along with a reduced buy. In addition, negotiations with
suppliers have produced improved payment terms.
-- Reduced capital expenditure - for FY21, capex has been
restricted to less than GBP10m, against the previous guidance of
GBP15m.
-- Reduced operating expenditure - central headcount savings of
GBP15m annualised have been implemented, a significant increase on
the GBP7m announced in February 2020. Of the GBP15m, we anticipate
an FY21 saving of GBP7m.
-- Improving retail store profitability - store payroll savings
of GBP12m annualised have been implemented, through restructuring
across UK and North America stores, with anticipated FY21 cost
saving of GBP5m. In addition, negotiations with landlords have so
far yielded property cost savings of GBP3m. We anticipate volume
driven rent savings for FY21 of GBP16m.
-- Increased controls - the controls remediation programme has
been launched, supported by Deloitte and a new full-time programme
manager. Delegated authorities and risk management processes across
the business have been revised.
As part of the previously announced reduction in headcount,
these initiatives across central functions and the retail store
estate in the UK and North America are now expected to result in
GBP12m of cost savings in the current financial year, GBP27m on an
annualised basis. The cash cost associated with achieving these
savings of GBP6m well be incurred in FY21.
Trading Update & Outlook
-- Overall trading has been ahead of the base case scenario
provided alongside the Preliminary Results announcement on 1 June
2020. The base case scenario was one of two ranges set at the time
of the equity raise, along with the reasonable worst case scenario
which was used for funding requirements.
-- Online trading has remained significantly ahead of
expectations, with the group continuing to benefit from consumer
behaviour shifting to online, the uninterrupted operations of our
global distribution centres and enhanced trading mechanics
introduced during the year.
o E-commerce sales increased 35% and represented 69% of total
retail sales (2019: 25%). This is significantly ahead of the 19%
decline in the base case revenue scenario.
-- On 29 April 2020, the Company began a controlled re-opening
of stores across Europe, North America and the UK. As at 18 July
2020, 95% of the store estate was open globally, and 75% of stores
have been operational for the last four weeks. Like-for-like store
sales were down 50% versus last year for the last four weeks of the
trading period.
-- For the 11 weeks to 18 July, total retail sales fell 50%.
Store revenue decreased 79%, with sales performance impacted by
store closures globally. This compares to a 83% decline in the base
case revenue scenario. Like-for-like store sales were down 52%
versus last year.
-- Wholesale and licence revenue decreased 70% compared to 60%
decline in the base case revenue scenario. The weaker performance
reflects cautious ordering from store-based trustees since the
early phase of the pandemic.
-- Increased social media engagement and more focused and
targeted digital marketing activity has stimulated sales.
Promotional activity has been elevated, but in line with peers,
which has had some impact on Group gross margin as expected.
-- In common with many other public companies, the Board will
continue to withhold guidance for the current financial year ended
30 January 2021 given the unprecedented uncertainty around the
severity and duration of the impact of Covid-19.
Strong Balance Sheet:
-- As at 11 July, net cash was GBP56.7m, ahead of management
expectations and reflecting actions taken to maximise cash and
reduce expenditure.
-- The net cash position reflects an aggregate GBP173m of net
proceeds from the previously announced sale of the UBB and capital
raise.
-- Excluding the fundraising proceeds Net Debt would be
GBP116.3m, an improvement during the past 16 weeks from the
GBP137.8m Net Debt as at 22 March 2020.
-- As at 18 July, the Company has GBP161.7m of available
headroom on current bank facilities of GBP108m, with an additional
GBP25m becoming available from September 2020.
Rachel Osborne, Chief Executive Officer, commented:
" I am pleased with the early progress we have made in driving
operational excellence and cost efficiencies since the launch of
Ted's Formula for Growth in June. Our customers are engaging with
the brand and responding to our COVID19 promotional activity, as
evidenced by our resilient trading over the past 11 weeks.
Our performance is encouraging, but I caution that it is still
early days, and we have a substantial amount of work to do over the
next 12 months against a backdrop of significant uncertainty in the
world. However, the Brand has an exciting future, and I am looking
forward with cautious optimism that the initiatives currently
underway across all areas of the business will bear fruit over the
next 12 months."
(1) Constant currency comparatives are obtained by applying the
exchange rates that were applicable for the 11 weeks ended 20 July
2019 to the financial results in overseas subsidiaries for the 11
weeks ended 18 July 2020 to remove the impact of exchange rate
fluctuations.
CONTACT DETAILS
Ted Baker
Investor.relations@tedbaker.com
Rachel Osborne, Chief Executive Officer
David Wolffe, Chief Financial Officer
Phil Clark, Commercial and Strategy Director
Tulchan Communications (Financial Communications) Tel: +44 (0) 20 7353 4200
Jonathan Sibun / Jess Reid / Will Palfreyman E:
tedbaker@tulchangroup.com
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END
AGMURUARRSUBUUR
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