Ted Baker cuts costs as stores closed by coronavirus
Struggling fashion retailer Ted Baker has implemented a series of cost-saving measures aimed at protecting cashflow in the wake of the COVID-19 crisis.
The company has closed 384 of its 416 stores, which have accounted for about 68 per cent of the brand’s global retail sales last January financial year. However, online sales for the first eight weeks of the current year are running 16 per cent higher than last year.
Meanwhile, all non-essential capital expenditure has been suspended, the company has frozen discretionary operating expenses and is severely restricting travel by staff.
Acting CEO Rachel Osborne said the rapid evolution of the coronavirus crisis globally is creating uncertainty across many of the markets the brand sells into.
“The spread of COVID-19 has led to some unprecedented events around the world and uncertainty for our business and our people,” she said.
“We welcome the support packages so far announced by governments and continue to focus on keeping our customers and employees safe and all of our stakeholders informed,” she concluded.
While physical stores are not currently selling, there has been only minimal disruption to the brand’s supply chain so far, with a “significant majority” of its factories in China now operational.
Osborne said it is difficult to predict how international public policy will evolve as the crisis expands around the globe, but the company will monitor and respond to government advice to best serve employees, customers and wider stakeholders.
She said it was too early to provide “meaningful guidance” for the new financial year and indicated an update will be provided in May. For now it is holding to its prior guidance of an underlying pre-tax profit for the January 2021 year of between £5 million and £10 million (US$5.8 million to $11.6 million).
Meanwhile, the company has sold its headquarters, The Ugly Brown Building on St Pancras Way in London, to an arm of the British Airways staff pension fund for £78.75 million. It will lease the building back from the new owners and deploy at least £72 million towards reducing its debt. The sale price represents a 39.1-per-cent premium on the building’s last published book value.