Ted Baker shrugs off House of Fraser hit but gets dressing down

The boss of Ted Baker on Thursday played down the hit it took from money owed by House of Fraser as shares in the fashion brand crashed.

Chief executive and founder Ray Kelvin said: “We lost a little bit of money but it’s not an issue. We still continue to trade there, our strategies are aligned.”

The business, known for its floral designs, today said revenues were up 3.5% to £306 million for the first half to August 11, slightly below some analysts’ expectations, and warned that the rest of the year would remain challenging. Shares fell 308p, or 13.3%, to 2000p.

Pre-tax profits dipped 3.2% to £24.5 million because of one-off costs such as the £600,000 it lost to House of Fraser and higher costs related to the day-to-day running of the business.

House of Fraser collapsed into administration and was bought by Sports Direct tycoon Mike Ashley for £90 million in August. After he inked the deal he said he would not repay suppliers, which left hundreds of brands out of pocket.

Ted Baker’s online sales were strong, up 24% and accounting for £53 million of sales, but retail sales per square foot, excluding e-commerce, fell 9% to £396 million. Wholesale revenues grew 10.1% to £85.9 million. The retailer plans to open two new stores in Britain, three in America and one in Spain, as well as a string of outlets and concessions overseas. Kelvin added: “We feel very positive about the outlook.”

Analysts at Peel Hunt said: “With a warm start to autumn, current apparel sales remain challenging, something Ted won’t be immune to, albeit comparatives ease as we move into October.”

Last month Ted Baker signed a deal to bring its footwear manufacturing business back in house. Ted paid £13 million to snap up No Ordinary Shoes in the UK and US from Pentland Brands, which had been the retailer’s footwear licensee since 2001.