LONDON — The tide is turning at Ted Baker, which narrowed losses in fiscal 2022 and saw group sales climb nearly 21 percent to 428.2 million pounds in the year ended Jan. 29.
The British high-street company, which confirmed earlier this week that it’s in exclusive talks with a potential buyer, thought to be Authentic Brands Group, saw pretax losses decline to 44.1 million pounds from 107.7 million pounds in the previous year.
Rachel Osborne, Ted Baker’s chief executive officer, said the company is making “good progress” against its transformation plan, and delivered “strong sales momentum” in 2022. She added that growth trends have continued into the current year as people return to work, and to socializing.
“While we remain mindful of what is a challenging macro environment, we are well positioned for growth. The positive response to our spring collection and the recent launch of our new digital platform, supported by our strong brand, capital light strategy and well-established distribution channels give us confidence in Ted Baker’s future,” Osborne added.
Group sales in the first quarter of the year were up 20 percent compared with last year, although they are 37 percent lower than the corresponding period in 2020.
The company said it has had an “encouraging” start to the second quarter, with improvement in sales trends in the U.K. and European Union.
By contrast, Ted Baker’s North America retail business has been “adversely impacted” by product availability and disruption following the transition to the e-commerce platform.
Retail analysts were quick to comment on the results, and Ted Baker’s sales prospects.
Alex Smith, global sector lead at Third Bridge, a research firm for private equity businesses and hedge funds, said Ted Baker’s next owner will have to revitalize the brand’s “fading” image.
“There are very few brands that have the sheer personality of Ted Baker and the value of a refresh could be huge,” wrote Smith, adding that the company’s growth ambition of 5 percent is “achievable with the right level of investment and commitment from the new owner and more relevant products. It also requires the management team to get behind Ted’s digital strategy.
“The sheer size of the U.S. market means a massive opportunity for future growth. However, incumbent digital players, such as Amazon and eBay, are also moving into premium fashion,” Smith said.
On Monday, Ted Baker’s board also confirmed that Sycamore Partners Management is no longer participating in the formal sale process. It was Sycamore that initially spurred Ted Baker to put itself up for sale, after making a series of unsolicited offers for the brand.
ABG has declined to comment regarding its interest in Ted Baker.
As reported, the criteria for any ABG acquisition is that it be a global brand with growth potential, much of it centered around licensing opportunities. In the case of Ted Baker, the British company fits the bill.
ABG recently finalized its 2.1 billion euro purchase of Reebok and partnered with David Beckham to co-own and manage his business. ABG’s value now exceeds $21 billion as measured by annual retail sales.