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NYC private equity giant circles Ted Baker

by LLB Reporter
18th Mar 22 12:09 pm

It looks like someone might bring an end to Ted Baker’s horrific time as a listed company. US private equity group Sycamore is weighing up an offer, perhaps drawn to the fact the clothing retailer’s share price had halved between September 2021 and February this year. Even at the current 114p price, that’s still significantly below the near-£30 levels at which it traded in 2015.

Ted Baker’s fortunes have collapsed in recent years. First came the hugging incident where founder Ray Kelvin was accused of inappropriate behaviour towards staff. Then the company was besieged by a series of profit warnings, a new chief executive who lasted less than a year, and accounting errors where it overstated the value of its inventory.

“It was forced to slash prices to compete in a heavily discounted market, which really hurt profit margins,” said AJ Bell’s Russ Mould.

“Sycamore appears to have spotted an opportunity to step in and buy the company while its valuation remains low and to help with the recovery efforts.

“Ted Baker’s latest trading update shows an acceleration in sales growth, improved margins, a small year-end net cash position and encouraging comments from the management. That’s encouraging but the market has yet to be won over by the numbers, so Sycamore must be putting a lot of faith in the company’s turnaround potential.

“There are major headwinds over the coming months for retailers given the inflationary pressures on family finances. Therefore, acquiring Ted Baker now could come with additional challenges beyond those which have already shaken the business for years.”

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