UPDATE: Ted Baker Completes GBP95 Million Equity Raise To Reduce Debt

(Alliance News) - Ted Baker PLC on Monday said it completed a GBP95 million fundraise and earlier ...

Alliance News 1 June, 2020 | 6:20PM
Email Form

(Alliance News) - Ted Baker PLC on Monday said it completed a GBP95 million fundraise and earlier reported a swing to a loss on expenses, including a substantial charge relating to inventory.

The luxury fashion retailer placed 126.7 million shares at 75 pence, a 51% discount to its closing price on Friday. Shares in the company closed down 15% to 130.00p each in London on Monday.

Earlier on Monday, Ted Baker reported a GBP79.9 million pretax loss for its year ended January 25 after a GBP30.7 million pretax profit the year before.

Ted Baker explained that this was: "Due to the group booking GP84.6 million of non-underlying expenses, mainly comprising total charges of GBP45.8 million related to inventory, GBP16.2 million related to impairment of store assets, GBP7.6 million related to losses on the disposal of the Asian business and GBP6.5 million for legal and professional costs".

On top of these, Ted Baker also incurred GBP5.0 million of charges relating to the first-time application of IFRS16.

Revenue fell 1.4% to GBP630.5 million from GBP639.6 million thanks to "significant discounting" in the apparel industry as a whole and the UK in particular due to a "weak consumer spending and channel shift to online".

Back in March, Ted Baker agreed to the sale and leaseback of its Ugly Brown Building headquarters in London for GBP78.8 million in cash, with the proceeds to be used to reduce debt. Shareholder approval for the disposal is required and, if obtained, the deal should complete by the end of June.

Ted Baker has inked an amendment and restatement agreement with its lender to increase one of its loan facilities, facility B, for an additional GBP11.5 million taking total available bank credit facilities to GBP205 million.

Disposal proceeds will reduce indebtedness to the company's lenders, while the placing and open offer will be used for general corporate purposes to support the company's new "Ted's Formula for Growth" strategy.

The company's strategy is broken down into three sections - known as 'building blocks'. Building block 1 focuses on stabilising Ted Baker's foundations and includes things like the appointment of Barton as chair, the selections of a new chief executive, chief financial officer, and chief creative director are also part of this.

The sale and leaseback is also part of building block 1, as is an operational and efficiency review that has found GBP5 million of cost savings for the currently financial year that will cost GBP2.7 million to achieve and will produce GP7 million of annualised savings. Ted Baker's response to Covid-19, including a focus on stock on hand and minimum orders to meet sales demand, is part of the first building block

Building block 2 is all about driving growth. This includes deepening and broadening customer relationships, re-energising the brand, making clothes that are relevant to all day or week occasions.

Building block 3 is about improving operations. "Initiatives in this building block are focused on creating a digital and data-led operating model, creating a high-performance business culture, and creating a commercial and agile business, enabled by a more effective organisation," Ted Baker explained.

Ted Baker also commented on current trading, noting that revenue has fallen 36% for the 14 weeks from January 26 - although online retail channel sales were up 50% in the period. It intends to focus intensely on its online business going forward and has deferred all of its non-essential capital spending.

In financial 2021, Ted Baker will aim to consolidate its supplier base to 100 suppliers from more than 150 and to reduce its stock cycle to two years from three. It plans to limit capital expenditure to GBP15 million annually and cut global payroll costs.

It also set financial targets to financial 2023, including medium-term revenue growth of about 5%, an earnings before interest, tax, depreciation, and amortisation margin of between 7% and 10%, free cash flow generation after capex of at least GBP30 million and a net debt to Ebitda ratio of 1.0 times or less by financial 2023.

CEO Rachel Osborne said: "Today we are excited to launch 'Ted's Formula for Growth', a comprehensive strategy for the Ted Baker brand which is supported by a significant recapitalisation of the business, that strengthens our position and enables us to both execute that transformation, and navigate through the disruption caused by Covid-19".

Ted Baker's final dividend has been temporarily suspended, It paid a 7.8p per share interim dividend, having paid out a total dividend per share for the prior period of 58.6p.

The company also has appointed BDO LLP as its new auditor.

By Anna Farley; annafarley@alliancenews.com Updated by; Eric Cunha; ericcunha@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

Email Form

Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Ted Baker PLC 64.58 GBX -3.61 -

About Author

Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.

Audience Confirmation

By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies