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magazineTed Baker is tailored for smart growth
Strong half year results (11 Oct) from Ted Baker (TED) demonstrate the strength of the designer label brand, one boasting abundant long-term growth potential across many channels (retail, wholesale, licensing) and geographic markets.
Ted Baker, the aspirational fashion brand which doesn’t advertise, boasts brand strength and pricing power, as demonstrated by gross margins well north of 60%. The stock has fallen from last November’s peak as sentiment soured on the back of lower density store sales.
The delivery of a better-than-expected 20.5% increase in interim pre-tax profit to £21.5m shows the quirky brand still has growth legs.
Famed for its product quality and detailed designs, Ted Baker’s winning brand contrasts with that of struggling peer French Connection (FCCN), whose ‘FCUK’ logo now appears dated.
Ted is pushing ahead with its international roll-out of new stores and concessions across the UK, Europe, North America and Asia. The e-commerce business is on a growth tear with sales up 29.7% to £29.7m in the six month period. Ted also confidently raised its dividend 12.1% to 14.8p.
Broker Canaccord Genuity has a ‘buy’ rating and £35.71 price target for Ted Baker, implying upside of 41%. (JC)
While Ted Baker trades on well over 20 times forecast earnings at £25.39, the premium valuation is more than merited given the brand’s global growth potential.
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