The Ted Baker (LON:TED) share price has been struggling this year, rocked by a profit warnings in both February and June.
A combination of fragile consumer climate conditions, aggressive promotions, plus questions over the founder Ray Kelvin’s behaviour in the office, all contributed to the poor performance of the Ted Baker (LON:TED) share price in 2019.
A slow start to the year for Ted Baker
The fashion house had a so-so start to the year, as revenue in the first quarter ticked up by 3.8%. Total retail sales slipped by 0.3%, but online sales edged by 2.4%, and e-commerce sales now account for 26% of the total sales, which is a slight improvement on last year’s number. Wholesale sales also increased by 14.2%.
It is encouraging to see that online sales is a sizeable portion of the company’s total revenue, as e-commerce is likely to play a bigger part in the business in the years to come. Higher expenses like wages, as well as rents, are crippling high street businesses, so Ted Baker’s increasing online division should stand the group in good stead and will hopefully be reflected in Ted Baker’s share price.
Have consumer habits affected the Ted Baker (LON:TED) share price?
This week it was reported that the US company, Forever 21, filed for bankruptcy. The group has a number of outlets in the UK, and it is the latest in a list of fashion houses running into problems. Shoppers in the UK are tightening their belts as uncertainty in relation to Brexit has dampened their appetites, which is one of the issues facing retailers. Some companies are going down the price cutting route, but that often leads to squeezed profit margins, and sometimes profit warnings.
Recently we heard from Next as well as Boohoo , and both companies are performing well. Next saw its first-half sales rise, as respectable growth in online sales offset the decline in footfall at their stores. The group is pivoting towards e-commerce as that is the way consumer habits are changing.
Boohoo is an online-only fashion house, and it is going from strength to strength. The stock hit a record high this month, while the Ted Baker (LON:TED) share price fell to a seven-year low in June. The stellar performance by Boohoo shows that e-commerce is a great way to get ahead in the retail space, provided your clothes are in fashion.
Since late 2015, the Ted Baker (LON:TED) share price has fallen in excess of 70%. In July, Mr Kelvin, who still owns a 35% stake in the group, said he would be open to the idea of a private equity group making a bid for the firm. The announcement helped the Ted Baker share price break above the 900p mark, and it is currently holding just above that level.
Ted Baker’s half-year results are out at 7am on Thursday.
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