Why we got it wrong on Ted Baker
Ted Baker (TED) 459.2p
Stop loss triggered
Original entry price: 912p, 22 August 2019
We have to hold our hands up and say we got it badly wrong on British fashion brand Ted Baker (TED). We felt a lot of negative news was already reflected in the share price but we didn’t anticipate just how weak first half trading at the company would be.
The statement was a real shocker. The company was already enduring a tough 2019 amid the departure of founder Ray Kelvin over allegations of inappropriate conduct and earlier profit warnings.
However, the market clearly didn’t expect it to post a £23m pre-tax loss, with trading badly hit by weak consumer spending. Group revenue was down 0.7% to £303.8m, with retail sales in reverse in the UK and Europe, North America and the Rest of the World regions and licence income and e-commerce sales both falling. On top of that, the dividend was cut by more than half to 7.8p.
Perhaps most concerning was the outlook which flagged expectations for a weaker second half year-on-year.
While we did flag the risks facing the business in our original article, this situation is a reminder of the dangers of buying a stock that has issued lots of bad news as more could be in the pipeline.
SHARES SAYS: A disappointing outcome. The company has plenty of work to do to repair sentiment. Stay clear.