More than £140m has been wiped off the value of the fashion retailer Ted Baker after it warned that challenging trading conditions had been compounded by the recent heavy snows.
The shares tumbled 13% on Thursday after its chief executive, Ray Kelvin, said that wintry weather had deterred shoppers from updating their wardrobes both here and in the US.
“The recent unseasonal weather across Europe and the east coast of America has had an impact on the early part of trading for spring/summer,” said Kelvin. “We anticipate that external trading conditions will remain challenging across many of our global markets.”
His gloomy prognosis came despite a successful year when both sales and profits grew strongly. Pre-tax profits rose 12% to £69m, while sales were up more than 11% at £592m.
Quick GuideThe state of UK retail's ill-health
Show
Retailers that have gone bust 2017-18
Toys R Us: 180 stores employing 3,000 staff, collapsed 28 February. Owes £15m in VAT, due by 1 March.
Maplin: 200 electronics and gadget stores, founded 1972, also failed on 28 February.
Warren Evans: bedmaker went into administration earlier in February.
East: fashion brand with nearly 50 outlets folded in January.
Juice Corp: business behind brands including Elizabeth Emanuel and Joe Bloggs went under in January.
Multiyork: furniture chain with 50 stores went into administration in November.
Feather & Black: bedroom furniture and bedding specialist with 25 outlets fell into administration in November.
Retailers under pressure
New Look has debts of more than £1bn and has lost some of its credit insurance cover, which protects suppliers if a retailer goes bust. In the 10 months to Christmas, sales fell 11% and losses hit £123m. The company intends to close 60 stores and change its fashion ranges, but faces a struggle to win back young shoppers.
House of Fraser's Chinese owner, Sanpower, had to stump up £25m to see the store through Christmas and its debt is rated as junk. The retailer is attempting to reduce the size of its stores by 30% and has asked landlords to cut rents.
Debenhams, a 178-store chain that is more than 200 years old, is axing one in four of its managers and considering closures to cut costs. It has warned that profits have been hit by lower than expected sales, with profit margins also down as a result of having to cut prices to match rivals.
Kelvin’s cautious outlook added to the gloom in the retail sector after a series of updates from major retailers on Wednesday had pointed to a level of distress and weak consumer confidence not seen since the financial crisis a decade ago.
Moss Bros issued a stark profit warning while the landlords of the fashion chain New Look approved a plan that will see it axe 980 jobs and close 60 stores via a so-called company voluntary arrangement (CVA). It also emerged that Carpetright is also seeking a CVA as it looks to shed up to a quarter of its 409 UK stores. Mothercare, the struggling parent and baby retailer that is in talks with its banks, said it had been given more time to secure extra funding.
The failure of Maplin and Toys R Us last month had already dealt a severe blow to high street confidence as together the chains ran more than 300 stores and employed 5,500 staff. On Thursday PwC, which is overseeing the Maplin administration, made a further 66 redundancies at its head offices in London and Rotherham, bringing the total number of job losses at the chain to 129.
“While the latest news of struggles at Moss Bros, New Look, Mothercare and Carpetright has further ignited concerns over the state of retail in the UK, Ted Baker’s latest results provide a glimmer of hope as the premium lifestyle brand continues to build on its successes,” said Charlotte Pearce, an analyst at GlobalData.
She added: “By generating a decent proportion of sales from international markets, Ted Baker will be more protected considering the tough UK retail climate.”.