Ted Baker PLC's shares tumbled 16.2% on Dec. 10 after the U.K. apparel, accessories and luxury goods brand delivered a profit warning for fiscal 2020 due to worse-than-expected trading in the run-up to Christmas and said its CEO and chairman quit.
In addition, the London-based retailer said in a statement that it would temporarily suspend dividend payments with immediate effect.
Like many U.K. retailers, Ted Baker has struggled with macroeconomic uncertainty, weak consumer spending and an environment of elevated promotional activity, which ate into gross margin. It has appointed Alix Partners to conduct a wide-ranging review of operational efficiency, costs and its business model.
It is not the first sign of difficulty at the company, which operates 560 stores and concessions worldwide. On Dec. 2, Ted Baker said the value of inventory on its balance sheet had been overstated. In preliminary findings, it estimated an impact on value of £20 million to £25 million on a non-cash basis and related to prior years.
In the 17 weeks to Dec. 7, organic revenue fell 3.1% year over year to £203.8 million as a 1.9% rise in wholesale revenue was more than offset by a 4.8% decline in retail revenue. Online sales, part of retail revenue, dipped 0.7% year over year.
Ted Baker said it lowered its expectation for profit before tax in the fiscal year ending Jan. 25, 2020, to a minimum of £5 million and "a potential outcome" of up to £10 million, depending on Christmas trading and final-year review. In a trading update in June 2019, the company had forecast profit before tax in a range of £50 million to £60 million. It reported profit before tax in fiscal 2019 of £63 million.
In a separate announcement, the company said CEO Lindsay Page resigned and that CFO Rachel Osborne was appointed acting CEO with immediate effect. Osborne joined Ted Baker only in November 2019. The board said a search for a new CEO would begin in January 2020.
David Bernstein stepped down as executive chairman with immediate effect, another statement said. Sharon Baylay assumed the role of acting chairman until a permanent successor is appointed.
In early trading on the London Stock Exchange, Ted Baker's shares were down 64.88 pence at 334.72 pence.