Investors in lifestyle brand Ted Baker (TED) breathed a sigh of relief after the firm posted an upbeat fourth quarter trading update and said it ended the year with a small positive cash balance. Its shares advanced 7% to 94p on above-average volume.
In contrast, shares in maternity and nursing-wear brand Seraphine (BUMP) more than halved after the firm cut its full year earnings target due to a combination of headwinds.
TED POSITIVE
Ted Baker said sales for the 12 weeks to the end of January were up 35% on the same period a year earlier, marking an acceleration from the 18% growth rate of the third quarter.
The full-price sales mix improved markedly, while the firm navigated challenges in the global supply chain with only a ‘modest’ impact on product availability leading to a 3.5% increase in the group trading margin during the quarter.
The company confirmed its 2023 financial targets of £30 million of free cash flow and an earnings before interest, tax, depreciation and amortisation margin of between 7% and 10% of sales.
In a sign of confidence in the outlook, the group said it had signed a new franchise agreement in the UK and planned to expand with at least three new store locations set to open per year for the next three years.
SERAPHINE SLUMPS
Meanwhile, shares in Seraphine tumbled 54% to 93p after the firm cautioned that slow demand in February combined with ‘a number of margin and cost challenges’ meant annual profits would be significantly below estimates.
The group said it had seen strong sales in the 17 weeks to the end of January, particularly in North America, led by its digital business.
However, it warned that February had been ‘soft across all markets and channels’, with retail store trading still ‘extremely challenging’.
While it forecast a pick-up in March, it said a combination of factors meant EBITDA for the full year to the start of April would be in the region of £4.5 million compared with a consensus forecast of £6.2 million.
The company is implementing a number of changes and expects sales for the year to April 2023 to grow by around 25% to 30%, although it acknowledges it will take time for EBITDA margins to rebuild.
