Ted Baker posts jump in Christmas sales amid solid online performance

In an update for the five weeks from 2 December 2018 to 5 January 2019, the company said retail sales rose 12.2% compared to the same period a year ago, with e-commerce sales up 18.7% and now making up 25.7% of total retail sales compared to 24.3% the year before. Meanwhile, average retail square footage rose by 5% during the period.

The group said gross margins remain in line with its expectations for the full year against a backdrop of increased promotional activity, and it expects to end the year with a clean stock position.

Consequently, results for the year to 26 January 2019 are expected to be in line with the company's expectations.

Acting chief executive Lindsay Page said: "The Ted Baker brand has delivered a good performance across both our stores and e-commerce business, despite the continuing challenging external trading conditions across our markets. This result again reflects the strength of the brand and the quality of our collections.

"I would like to take this opportunity to thank our teams for their outstanding enthusiasm, skill and commitment throughout this key period and our global partners for their continued support."

The group also said that the work of the independent external investigation conducted by Herbert Smith Freehills LLP in respect of the recent media reports and petition against founder Ray Kelvin is progressing and a further update will be made in due course.

At 0935 GMT, the shares were up 11.3% to 1,798p.

Liberum, which rates the stock at 'buy', said this was an "excellent" Christmas trading performance.

"The group's flexible retail model and strong proposition clearly drove strong traffic online as well as footfall dynamics over this period," the brokerage said. "A strong result considering the market backdrop which places Ted Baker in a very distinct group of companies and raises the question as to why Ted's shares have de-rated 39% over the past 12 months."

Liberum, for whom Ted Baker is a corporate client, said the stock's current 12-month forward price-to-earnings ratio of 11.8x is "just too low for such a high quality business".

George Salmon, equity analyst at Hargreaves Lansdown, said: "This positive update is important for Ted Baker. Not only does it help erase the memory of the disappointing sales momentum that blighted 2018, it also allays concerns that news around the CEO’s alleged conduct could have impacted trading in the all-important Christmas period.

"Ted Baker’s got a great record of building profits and dividends, but given Ray Kelvin has been a significant factor in the ascent from a single shirt shop in Glasgow into a global lifestyle brand, the fallout from the ongoing investigation has the potential to rock the boat."