Fast fashion fever pays off for Ted Baker and Next

Fashion chains Ted Baker and Next have shrugged off the high street gloom to clad themselves in soft folds of newly-spun profit.

by Rebecca Burn-Callander
Last Updated: 17 Mar 2016
The passion for fashion is back. Yesterday, ASOS reported record profits off the back of strong growth in the US. Today, Next reveals that profit is up 9% to £621.6m, while high end fashion brand Ted Baker has turned out a profit rise of 19.2% to £28.9m.

Sales at Next’s bricks and mortar business – the brand currently runs 541 stores – remained flat at £2.2bn for the year to January. But the firm’s investment in its online offering has really paid off, with its online directory business increasing revenues by 9.5% to £1.2bn. Yet John Barton, Next chairman, injects a note of caution into his annual statement: ‘We anticipate another challenging year ahead, with little if any growth in the UK retail economy,’ he says.  

His prudence is understandable. Next sales were hit by the cold snap at the start of the year, and the weak pound could cause profits to fray if it remains at its current subdued rate against the dollar. Despite this, profits forecasts for the year are still set at between £615m and £665m.

Nevertheless, 2012 was quite the success story for Next. Ten new stores have opened, with a new £350m outlet rolling up the shutters at Trinity shopping centre in Leeds as we write. The fashion retailer has also just taken on one-time S Club 7 star Rachel Stevens as the face for its new Petites range. Less ‘Reach for the Stars’, more ‘reach for the bras’.

Shares were 1% higher following the update, and Next has confirmed that it is raising its divi to 105p.

The mystifyingly-expensive Ted Baker, meanwhile, has also notched up an impressive increase in sales on its home turf. Revenues in the UK have climbed 11.1% to £165m, with the greatest gains in sales of its quirky womenswear – up 27.7% to £137.1m. Across the whole business, turnover is up 18% to £254.5m.

It too has been opening a raft of new stores, taking advantage of cheaper property prices in the UK and pushing into lucrative Asian and US markets to swell its portfolio to 300 shops worldwide.

Its New York business is now the real jewel in the diamante-studded bolero: sales on the other side of the Atlantic have jumped by 68.3%. Like Next, Ted Baker’s online offering is also performing above expectations, with sales up 63.7% on the year to £14.9m.

‘This strong performance has been achieved despite a challenging and competitive trading environment and is testament to the strength of the brand, our collections and our people,’ says Ray Kelvin, founder and chief executive, echoing Next’s Barton.

With today’s ONS figures showing that retail sales recovered in February, and these decent sets of figures from the UK’s fashion stalwarts, things could finally be looking up for the UK high street.

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