Profits plunge 26 per cent at Ted Baker after ‘difficult’ year

Profits fell at Ted Baker last year for the first time since the financial crisis as the company faced “very difficult trading conditions” in a year when harassment claims dogged its chief executive.

The figures

Profits before tax at the menswear retailer dropped by 26 per cent to £51m even as revenue increased 4.4 per cent £617m.

Read more: Ted Baker CEO resigns in the wake of misconduct allegations

Basic earnings per share fell 23 per cent to 91p, with a 2.5 per cent decrease in dividends to 58.6p.

The company’s sales were helped by online retail, which increased 20 per cent to £121m, and sales in Europe and North America, which were up 4.6 per cent to £315m and 4.7 per cent to £126m respectively.

Why it's interesting

The results come just two weeks after founder and chief executive Ray Kelvin left the firm after allegations of harassment in the office. 

Late last year an online petition from around 200 members of staff claimed that he had forced female staff into hugs and paid them unwanted attention. 

“He'll want to brush this under the carpet,” petition claimed. “But staff won't be ignored if thousands of us stand with them.”

Kelvin, who has declined the allegations, stepped down as chief executive earlier this month, saying he wanted to let the business "focus on being the outstanding brand it is". 

Shares fell around 5.3 per cent to 1,620p this morning.

CMC Markets analyst David Madden said: "Even though the online department is registering strong gains, the company is still opening a few stores. The clothing company knows that e-commerce is the future, so it is selective in its store opening.

"The fashion house confirmed that sales per square foot of store space dropped by 9%, and this underlines how tough it is on the high street. Online sales jumped by 24% in the first six months and the department is increasingly becoming an ‘important component’ of the business. Consumer habits are changing drastically, and Ted Baker will need to focus on the e-commerce side of the business if it wants to stay competitive."

What Ted Baker said

Acting chief executive Lindsay Page, who is set to hold the role until Kelvin's successor can be found, said: "Ted Baker has continued to grow across each of the brand's distribution channels despite difficult trading conditions across a number of the group's global markets. This resilient sales performance again reflects the strength of the brand, the talent of our teams, and the quality of our collections.

"We have made a number of significant investments to ensure that Ted Baker remains well positioned for long term development."

Read more: Ray Kelvin held Ted Baker too tight

Chairman David Bernstein said an investigation into Kelvin's actions, set to end early in the second quarter, would focus on Ted Baker's "policies, procedures and handling of HR-related complaints," after the boss's departure.

"The board are committed to ensuring that all employees feel respected and valued. We are determined to learn lessons from what has happened and from what our employees have told us and to ensure that, while the many positive and unique aspects of Ted Baker's culture are maintained, appropriate changes are made," he said.