For more than 30 years Ted Baker has taken everything the world has thrown at it in its stride: the fickleness of changing fashions, the fortunes of boom and recession, the revolving door of bull and bear markets. But it is no secret the Company got itself into trouble in the last few years. We tackled these issues head on at the end of 2019 and put together a transformation strategy to turn the Company around. As we began to put the plan in place, the challenges the Company faced were intensified by the onset of the pandemic.
Since the end of March last year, it has felt like a ride on a rollercoaster that is still being built, as we hurtle towards the next gravity-defying loop. It has made what would have been a difficult year for Ted Baker far more challenging. Yet we have kept a collective level head and found a way through, ending this terribly challenging year with a grip on the business and a clear transformation strategy in motion. And, despite the difficult trading conditions, with much to celebrate and look forward to with
a refinanced business, we have an exciting new vision for our product which takes the best of Ted Baker into the future, and an enduring love of the brand by our customers.
Read on as CEO Rachel Osborne tells the story of our year and our plans for the future.
Ted Baker plc Annual Report and Accounts 2021 1
Chief Executive's review
Rewriting the script:
transforming a business in a global pandemic
Quite simply, we began the year in a weak operational and financial position. In March, the pandemic amplified some of these weaknesses and has had a very obvious impact on our financial results. But, thanks to the combined efforts of the management team and team members, we faced up to the challenges and took action quickly. It started with the successful sale and lease back of our London head office, the Ugly Brown Building, and continued with a bank refinancing and an equity raise which, thanks to the continued support and belief of our shareholders, was hugely successful.
Chief Executive Officer
"...thanks to the combined efforts of the management team and team members, we faced up to the challenges and took action quickly."
2 Ted Baker plc Annual Report and Accounts 2021
The ongoing support of lenders and our suppliers was invaluable. As a result, the Group is in a strong cash position thanks to our refinancing efforts and intensive approach to cash management, which has given us the time to focus on the key issues facing the brand and the business.
Like many global lifestyle brands with a strong physical store presence, the financial story of our year doesn't make for easy reading, but I believe we are in a far stronger position today than we were 12 months ago. The brand's health is strong - we have fixed our foundations and hit the FY21 key performance indicators of our transformation strategy despite the pandemic. We have a new corporate mission to be the most engaging British lifestyle brand, which acts as our compass to take the Group forward over the next few years, supported by our values - being authentic, curious, courageous, inclusive and kind. We have also developed a new brand purpose that builds
on Ted Baker's past and brings it up to date for today's customers.
"We exist to create and celebrate the unexpected in the everyday."
Our London head office, the Ugly Brown Building
TURNING CRISIS TO OUR ADVANTAGE
There is no doubt that the pandemic caught the world unprepared. The negative impact on trading from three lockdowns has affected just about every bricks-and-mortar retailer in the world. We were also hampered by product that, with its focus on formal and occasionwear rather than casual and leisurewear, was hit hardest by lockdown, particularly in the important festive trading season.
The easing of restrictions gave little respite, with our city centres empty and tourists virtually non-existent. Add in the challenges of heavy discounting online across global markets and inevitably margins are down, and our figures tell a frustrating trading story that belies the progress we have made with our transformation strategy. Here is an overview:
Group revenue was down year-on-year by 44.2%.1
With stores closed through lockdowns and some permanent closures where we could not reach acceptable commercial lease agreements with landlords, our reported retail sales decreased 42.2%, reflecting the reductions in footfall.
Wholesale and licence revenue decreased by 48.7%. This is a result of cautious ordering from store-based trustees since the beginning of the pandemic; Brexit-related shipping delays; and declines in certain product categories, particularly in formalwear and luggage.
Ted Baker operated eCommerce sales increased by 30.2%, and in the year we enhanced payment methods, improved trading mechanics and increased investment in digital media. Group eCommerce sales, which includes our partners, increased 22.0% and represented 57.0% of total retail sales (FY20: 27.0%).
1 Current year is a 53-week period to 30 January 2021 compared to a 52-week period to 25 January 2020.