Ted Breaker

Ted Baker profit warning

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What's going on?

British luxury brand Ted Bakers stock fell almost 30% on Tuesday after it warned investors its annual profit would be lower than expected for the third time this year (tweet this).

What does this mean?

Over its 30-year history, Ted Bakers gone from a single store in Scotland to 200 around the world, baking its garments into the fabric of the accessible luxury scene. But in North America, which accounts for a third of Ted Bakers revenue, recent unseasonable weather a common retail bugbear has meant fewer shoppers through the doors. Tough competition from budget rivals was partially offset by the company cutting its own product prices, although that led to a lower profit margin. As a result, not-so-super Teds 2019 profit may be lower than last years and significantly below investors forecasts.

Why should I care?

For markets: The Great British Baker Off.


Investors were hot, cross bunnies when it came to Ted Bakers stock on Tuesday. Since investors like to forecast a companys earnings far into the future, and use those forecasts to determine what a stocks worth today, they tend to shun firms where future profits are particularly uncertain. And Ted Baker now plans to focus on cutting costs to meet its latest profit target rather than, say, doubling down on marketing to win over customers which makes it harder for investors to be confident that next years earnings will grow.



Zooming out: A miracle on the Hudson?


On Monday, the chairman of North Americas oldest retailer, the Hudson’s Bay Company, teamed up with a group of other shareholders to make an offer for the 43% of the business they dont already own. The struggling Hudsons been selling off subsidiaries as it restructures and the investors may think this has a better chance of succeeding away from the prying eyes of public shareholders. The same might be true of Ted Baker; but its former CEO and remaining majority shareholder, recently ostracized following misconduct allegations, seems an unlikely buyer.

Originally posted as part of the Finimize daily email.

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