Ted Baker PLC

Ted Baker Plc (LON: TED) is a global lifestyle company and offers a range of menswear, womenswear and accessories under its brand. The company split its business into three segments being Retail, Wholesale and Licensing.
Ted Baker is expecting to release its full-year results in May 2020.

Recent News
On 17^th December 2019:the group announced the appointment of Jon Kempster as an Independent Non-Executive Director with an immediate effect.

Company Update on Covid-19 and Additional Loan Facility (as on 20^th March 2020)
As on 20^th March 2020, the Ted Baker group announced the disposal of Big Lobster Limited for the consideration of approximately £78.75 million. However, under the sale and leaseback terms, the group will continue to hold the property with an annual rent of £3.25 million. Apart from this, the update discussed the additional credit facility through its lending bank for £13.5 million until 18 December 2020.  Regarding the impact of Covid-19, the group affirmed that its intensity is creating uncertainties across the group’s target markets. The group is now taking actions in relation to cost cut in operating expenses and capital expenditures. The group is expecting 100% business rates exemption, announced by the UK government though the Ted Baker has already paid £6.2m in FY 2020, as business rates. Currently, the group has shut down 197 stores out of 416 sites globally. In such a scenario, the group is unable to provide any rational guidance; however, the company anticipates the underlying pre-tax profit to be in the range of £5-10 million.

Share Price Performance

Daily Chart as of April9^th, 2020, after the market close (Source: Thomson Reuters)

Ted Baker PLC’s shares closed at GBX 167.4 on 9th April 2020, up by 19.57 per cent against the last day closing price. Stock's 52 weeks High is GBX 1,634.00 as on April-30-2019 and Low is GBX 90.05 as on March-31-2020. Total outstanding market capitalization stood at around GBP 74.64 million.

Valuation Methodology
 

Conclusion
Ted Baker’s business is hammered by Covid-19 crisis across all their markets, as the group stated that its 197 retail stores are currently closed, which represented 38 per cent of their global retails sales of FY2020. Even in their last full-year outlook (released on 25^th January 2020), the group discussed their underperformance and inefficiencies. It had reported a significant decline in both top-line and bottom-line figures. Moreover, the company witnessed wide fluctuations in the Personal Goods price in the UK market and expect the same in the coming future, which might have an adverse effect on the company’s financial performance.

The group is currently facing both business and economic risk. However, there is limited disruption over their supply chain network now, and their Chinese factories are now in an operational state. The group also holds a substantial volume of inventory level. Furthermore, the online business has been relatively resilient though the company has no meaningful guidance for FY 2021 yet.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the close price of GBX 167.40 (as on 9^th April 2020), while we look for any upcoming catalysts in the near term.

*All forecasted figures and Peers information has been taken from Thomson Reuters.

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