Ted Baker is set to raise £95 million from investors as part of a major turnaround strategy after it posted an annual loss of almost £80 million amid its full year results.
The fashion retailer has revealed its Ted’s Formula For Growth strategy, which it hopes will revitalise sales and slash debts as coronavirus lockdown restrictions unwind in all its territories.
It has set a target to raise approximate £95 million in gross proceeds from investors through a share placing and open offer, with shares being offered at 75p, which would go towards stabilising its finances and supporting the turnaround plan.
Meanwhile in its full year report for the period ending January 25, Ted Baker recorded a loss before tax of £79.9 million – compared to a profit of £30.7 million the previous year.
Total full-year sales declined 1.4 per cent to £630.5 million.
Ted Baker said that since the start of the current financial year, trading has been “significantly impacted” by the coronavirus pandemic, with sales plummeting 36 per cent for the 14 weeks to May 2.
Online retail sales jumped 50 per cent over the period, with a 78 per cent rise in the six weeks from March 22, it added.
Since the departure of founder and former boss Ray Kelvin amid a workplace behaviour scandal last year, Ted Baker has lurched from one crisis to another.
These include a string of profit warnings, internal investigations and governance upheavals, a significant stock overstatement and plummeting shares – all before the challenges arising from the pandemic struck in March this year.
As part of the share placing and open offer, it is not yet certain if Kelvin would decide to or even have permission to choose to commit an estimated £28 million he would need to retain his 35 per cent stake in Ted Baker – otherwise he risks having his stake diluted.
Due to Ted Baker’s plummeting shares, the amount it wants to raise through the share placing and open offer is more than its estimated £80 million market capitalisation.
Ted Baker’s new recovered strategy features three “building blocks”: stabilising the business, including “rethinking Ted Baker’s vision and commercial strategy”; driving growth through revitalisation and drawing new customers; and operational excellence.
As part of the latter “building block”, Ted Baker said it would increase its focus on online operations and has also secured £138.4 million in savings through a recent cost-cutting programme.
“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 chief executive Rachel Osborne said.
“The Ted Baker brand is much loved, it has a unique personality and character built up over many decades, and that provides us with a remarkably strong foundation from which to continue our international growth.
“Over the past six months our new executive team have pulled together and undertaken a thorough review of the business, identified key opportunities and acted decisively in a number of areas.”
Just before the nationwide lockdown was implemented in the UK and as so much of its global estate shut down due the pandemic, Ted Baker raised £13.5 million from lenders and raised additional cash from the sale and leaseback of its London headquarters building.
The retailer’s lenders had also reportedly been working with FTI Consulting to determine its prospects.
The news comes days after Ted Baker revealed it would begin a gradual reopening of its stores in England from June 15, as per the government’s guidance.
Read the full article here – retailgazette.co.uk