Fashion retailer and ‘global lifestyle brand’ Ted Baker (TED) sees its shares jump 10% today to £17.75 after revealing a positive Christmas trading update.

For the five weeks from the start of December to last Saturday retail sales grew by 12.2% driven partly by a 5% increase in selling space while online sales grew by 18.7%.

This is a sharp rise on the 2% increase in retail sales in the third quarter from mid-August to the start of December which it reported last month.

This positive news follows a difficult period centred around allegations over the behaviour of founder and CEO Ray Kelvin who is currently taking a leave of absence from the group.

The firm does say that it has achieved this uplift ‘against a backdrop of increased promotional activity’ which means it has had to compete on price.

Therefore it won’t see a big increase in gross margins but it will end the year with what it calls ‘a clean stock position’ which means it has shifted its inventory of unsold summer and autumn stock.

Another positive message from the results is that if we exclude the 5% increase in floor space, like-for-like sales were up by around 7%.

This is a major improvement on the third quarter when like-for-like sales were down around 3% (total retail sales up 2% minus new selling space up 5%).

Given that there is no change in margin guidance analysts aren’t likely to raise their forecasts but many are highlighting the low valuation being put on the shares even with today’s move in the price.

Issue Date: 09 Jan 2019