Ahead of its third quarter trading update on Thursday, Ted Baker has already said it expects a tough second half amid a high street downturn. Bricks and mortar retailers have had a rough year due to subdued consumer spending and online competition, leading to the demise of Coast. Maplin, Toys R Us and House of Fraser.
In the first half, Ted Baker took a hit from the collapse of House of Fraser, which was rescued by Sports Direct International PLC (LON:SPD) in August. Ted Baker has concessions in House of Fraser, which is closing number of stores across the UK.
As a result, Ted Baker’s pre-tax profit dipped 3.2% to £24.5mln in the six months to August 11, down from £25.3mln last year. The fashion retailer said it believed that the second half of the year “will remain challenging” due to external factors.
Jefferies expects that challenging market will limit third quarter sales growth for the company.
“After a subdued 1H19 performance we do not expect much relief in 3Q19E given unseasonally warm temperatures across the UK and Europe for some of the autumn,” its analysts said in a recent note.
“Consumer confidence has also dipped across the UK (-10 in October) and the Eurozone (-2.7 in October), affecting 67% of group sales. By contrast, confidence in the US has been strong, reaching a new high of 38 (30% of group).“
Jefferies estimates Ted Baker’s group sales to rise 2.9% to £136mln on a reported basis in the quarter, a 5% increase at constant exchange rates, with similar trends in retail and wholesale. It forecasts e-commerce sales to rise 20% and store sales to fall by “mid-single digits”.
DS Smith to deliver in-line numbers
Two “in-line” trading updates in as many months means it will be a shock if packaging group DS Smith PLC (LON:SMDS) publishes anything other than an “in-line” set of half-year results on Thursday.
The FTSE 100 group makes recycled packaging for some of the world’s largest consumer goods companies such as Procter & Gamble, Kraft and Danone.
At the start of November, management said it expects adjusted operating profit to be “materially ahead” after it put up prices to offset rising input costs.
In early June, DS Smith unveiled the €1.9bn acquisition of Spanish rival Europac to strengthen its position in western Europe’s fast-growing packaging market.
That deal has received approval from European regulators and is due to complete before the end of the year, so any guidance on that will be keenly eyed.
Thursday December 6:
Trading update: Ted Baker
Interims: DS Smith PLC (LON:SMDS), Custodian REIT PLC (LON:CREI), Versarien PLC (LON:VRS)
Finals: CareTech Holdings PLC (LON:CTH), easyHotel PLC (LON:EZH), Impax Asset Management PLC (LON:IPX)
Ex-dividends to clip 0.57 points off FTSE 100: Next PLC (LON:NXT), Royal Mail Group PLC (LON:RMG)
Economic data: US weekly jobless claims; US Challenger job cuts; US factory orders; US balance of trade