Ted Baker Bosses Quit After Profit Warning

Troubled fashion retailer's shares have fallen nearly 80% this year, raising the prospect of a takeover bid - perhaps from the founder himself

James Gard 10 December, 2019 | 11:31AM

Ted Baker

The pressure on UK high street retailers was laid bare on Tuesday after Ted Baker’s chief executive and chairman quit and shares crashed 15% after a profit warning.

Finance director Rachel Osborne is to take up the chief executive role after Lindsay Page stepped down after eight months in the role while executive chairman David Bernstein also quit. There has been a rash of boardroom departures among FTSE companies in recent years and Morningstar has looked at the impact on the short and long-term share prices.

The fashion firm said that its full-year profits would be in the region of £5 million, compared with £50 million a year before.

Just a week ago Ted Baker (TED) said it had uncovered an accounting error relating to the value of its stock and the board said “the last 12 months has undoubtedly been the most challenging in our history.”

The company is taking immediate steps in an attempt to turn the current malaise around: independent consultants Alix Partners is conducting a review into operations and costs, while the dividend is being suspended. The October review into the company’s assets is still ongoing, the board said.

Shares in former stock market darling Ted Baker hit nearly £35 in 2015 but are now trading at 340p, having fallen 78% this year. Founder Ray Kelvin stepped back from the firm this year amid a scandal over his conduct, but he retains a 35% stake in the business he set up in 1987. Analysts say that the slide in the share price this year leaves the company vulnerable to a takeover – with Kelvin himself, backed by a private equity firm, a likely buyer. Net debt of £132 million is close to the company’s current market capitalisation, so any buyer would have to factor that in.

Up to 1% of Ted Baker's shares are in the hands of short-sellers, firms that bet on a fall in company share prices. According to the FCA's daily register, Squarepoint holds a short position in the retailer's shares.

Stocks exposed to the UK high street and/or fashion have been under pressure this year. Shares in online-only fashion outlet Asos (ASC) have been volatile this year, but Next has managed to buck the trend with strong growth in its online division. UK property funds exposed to retail have also suffered this year and have been faced with rising redemptions. One of these, M&G Property Portfolio, gated its fund last week.

 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Ted Baker PLC293.76 GBX-1.36

About Author

James Gard  is content editor for Morningstar.co.uk

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