- Angela Gonzalez-Rodriguez |
New York –Ted Baker’s (LSE: TED) is going through a year to forget. However, the market remains faithful in the company’s potential in the long haul.
Struggling with maintaining its brand’s reputation after the founder was charged with questionable behaviour last year, the British fashion retailer issues a disappointing trading update in mid-June. Six months afterwards the company issued a disappointing trading update, warning of “Difficult trading period with ongoing external challenges impacting performance”. The company’s revenue declined by 1.1 percent during the 19 weeks to June, 8, which set the alarms off for investors.
On June, 11 Ted Baker’s former chief financial officer told Reuters that “The markets that we trade in have been extremely challenging and that has also led to levels of discounting I think we’ve rarely seen before, particularly in the UK.” In response to the profit warning, investors sold off shares wiping more than 150 million pounds from the company's value.
Ted Baker’s (LSE: TED) has traditionally performed well in adverse trading conditions
Despite the struggles, there are many in the market who remain faithful in the fashion company’s performance in the long term. It’s the case of ‘The Motly Fool’, which highlights that “So far, Ted Baker has performed well in a changing consumer environment with broadly rising revenues as well as profits year after year.” “We at The Motley Fool are interested in long-term investing opportunities. And going by CEO Lindsay Page’s statement at the time of the trading update release, the company’s “long-term growth prospects” appear sound. It remains to be seen, of course, if the FTSE 250 retailer is able to sustain its performance over time but I would definitely keep it on my radar,” reported the financial firm over the weekend.
Shares in the retailer fell 43 percent last year and had lost another 14 percent in the first half of 2019. Yet among 4 analysts covering Ted Baker Plc (LON:TED), 3 recommend buying the stock, and 1 currently maintains a ‘hold’ recommendation. Therefore 75 percent are positive.
‘The Motley Fool’ also points out that other fashion retailers are going through similar difficulties, calling attention to troubled investors in Burberry as the demand continues to weaken in China, or major share price’s at Marks and Spencer.
“The scale of today’s profit warning at Ted Baker will raise eyebrows... there will be questions around founder Ray Kelvin’s departure and the wider question of how to get Ted back on point,” Peel Hunt analysts wrote on the back of the financial update.
Image:Ted Baker website