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| Better than expected performance - Ted Baker Chief | | October 12, 2009 (UK) |  |
Ted Baker PLC Interim Results for the 28 weeks ended 15 August 2009.
Commenting, Ray Kelvin, Founder and Chief Executive, said:
“The Group’s performance in the first half of the year has been better than expected given the difficult trading environment. This trend has continued into the second half and whilst we remain cautious, given the uncertain economic outlook, the initial reactions to our Autumn / Winter collections have been encouraging.
We continue to benefit from our multi-channel distribution strategy and this, coupled with the strength of the Ted Baker brand and the support of our strong balance sheet, means we remain well placed to invest in the long term development of our business.”
CHAIRMAN’S STATEMENT
The Group’s performance in the first half of the year has been better than expected in an uncertain trading environment.
We continue to benefit from our multi-channel distribution strategy through which we operate our retail, wholesale and licence businesses. Sales in our retail division were ahead of expectations, with sales up 15.0% to £61.3m on average selling space up 16.1%. We continue to experience difficult trading conditions in our overseas markets, offset by our better performance in the UK.
As previously anticipated, wholesale sales were down 16.3% for the first half of the year, due in part to the difficult trading conditions being experienced by some of our wholesale customers, but mainly due to the transfer of some wholesale accounts to retail concessions and the closure of certain accounts no longer appropriate for our brand. We expect this trend to continue in the second half.
The growth of our retail business, allied with the reduction in wholesale sales, is expected to lead to a shift in the phasing of profit from the first half to the second half of the year. Improved trading in the UK offset a weaker performance in overseas markets, where conditions continue to be difficult.
Licence income for the period was £2.5m (2008: £2.9m), which was 4.8% ahead of last year if we exclude the impact of our North American licence partner, Hartmarx Corporation filing for bankruptcy protection in January 2009. We have seen good performances from our licensed childrenswear collection, exclusive to Debenhams, as well as from our footwear and eyewear product licences.
Hartmarx Corporation filed for protection under Chapter 11 of the US bankruptcy code in January 2009 and has subsequently terminated its licence agreement with us. We have since signed new licence agreements directly with companies who previously held product sub-licences with Hartmarx and with a Canadian distributor previously contracted by Hartmarx. This situation has enabled us to actively manage the further expansion of our business in this territory and we will continue to explore potential opportunities.
Ted Baker Womenswear delivered a strong performance for the period withsales up 17.9% to £36.9m (2008: £31.3m). Womenswear represented 48.2% of total sales (2008: 43.8%). A significant proportion of the increase in turnover is due to the transfer of wholesale accounts to concessions with a resulting increase in performance.
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