Ted Baker issues profit warning, shares plunge 17%
The clothing firm said that its pre-tax profit for the financial year ended January 2019 would be around £63 million, which is lower than the £74 million analysts’ had expected.
British luxury clothing retailer Ted Baker's shares nose-dived on Wednesday morning, falling as much as 16.9% on the London Stock Exchange after the firm issued a profit warning for its full-year profits.
The clothing firm said that its pre-tax profit for the financial year ended January 2019 would be around £63 million, which is lower than the £74 million analysts’ had expected.
The group had reported a profit of £73.5 million pounds for the previous financial year.
The bleak review follows the company’s speech in October where it cited a challenging second half of 2018 as consumers tightened their purse strings.
The group’s stock closed its previous day’s trading at £2,000 and opened Wednesday’s session lower at £1,663, before facing volatility in the first hour, fluctuating between highs of £1,800 to lows of £1,652.
Currency fluctuations, technology upgrade fees, and a write down on value of aged inventories
The firm said it has been hurt as much as £2.5 million due to foreign exchange rates between the pound versus the euro and the dollar greenback. Other financial hits for the retailer include technology systems upgrade costs that added up to an additional £2.5 million and an unanticipated inventory write down of £5 million due to warehouse transitions in Asia and the United States as well as a more 'prudent view' on the value of old stock, it said.
Ted Baker said January’s sales were ‘usual’, as it increased by 12.2%. The group added that its gross margins for the full-year were within expectations.
Ted Baker’s profit estimate does not include costs from the ongoing independent probe into the firm’s chief executive Ray Kelvin, debts owed by the House of Fraser, and certain acquisition non-cash impairments for retail assets, the firm said.
In December, Mr Kelvin took a voluntary leave of absence while he was being investigated on inappropriate behaviour such as forced staff hugging.
The firm is expected to announce its detailed full-year results on March 21st.
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