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Ted Baker Nears Collapse As $30 Billion Wiped From Luxury Market

Last Updated March 20, 2024 3:30 PM
Shraddha Sharma
Last Updated March 20, 2024 3:30 PM

Key Takeaways

  • Ted Baker’s UK and European retail and online operations are set to enter administration.
  • Reports reveal that a decrease in high-street shopping due to the pandemic is a major contributing factor.
  • The luxury market faces broader challenges, though projections for 2024 show some promise.

The iconic British brand Ted Baker is teetering on the edge of collapse. It has announced plans to call in administrators for its retail and online operations in the UK and Europe amid financial distress. Meanwhile, there was a severe blow to the luxury market in Europe after Gucci reported weak sales figures. Bloomberg reports that over $30b has been erased in value from the market as a result.

Pandemic’s Crushing Blow Felt in 2024

Ted Baker’s financial woes have been mounting, with the company reporting consecutive losses in recent years. January 2022 saw a loss of £35.6m, a slight improvement over the previous years but still far from its profitable days.

As per  Statista, the pandemic hit years of 2020 and 2021 were the worst in terms of losses. The downward trend is stark when compared to the profit of £52.7m in 2018 and £24.4m in 2019.

Ted Baker Annual P/L in GBP. Source: Statista
Ted Baker Annual P/L in GBP. Source: Statista

No Ordinary Designer Label is the company that has the rights to the Ted Baker brand. US-based Authentic Brands Group is the parent company. The brand has filed a notice of intent to appoint joint administrators affecting nearly 1,000 employees across 45 UK stores. Bloomberg reports  that Advisory firm Teneo is reportedly set to handle the process.  

However, according to Martin Lewis, founder of the website Money Saving Expert, Ted Baker lost its unique appeal.

The COVID-19 pandemic has also reportedly  brought havoc for high-street retailers, with Ted Baker being no exception.

The British Retail Consortium acknowledged  the low sales during the pandemic and has called February the “wettest” on record. Meanwhile, the Centre for Retail Research noted a shift in consumer behavior away from physical stores, compounded by a 10% drop in customer footfall since 2019. In major cities, the decline is even more pronounced.

Wider Industry Crisis in 2024?

The fashion chain’s crisis reflects a broader industry trend, with the Centre for Retail Research noting that 11 companies have collapsed in 2024, impacting over 10,000 employees. This trend is part of a larger slump in the luxury market. According to Bloomberg, a decline in luxury shares contributed to a drop in European stocks, erasing over $30b in market value. The downturn followed Kering SA’s announcement of a sales decline at Gucci.

Data  from 2007 to 2024 reveals a concerning trend in business failures. 2020 stands out as the most challenging, with 54 businesses failing, affecting 5,214 stores and leading to a staggering 109,407 employees being impacted. Following 2020, there’s a visible decline in these figures but 2023 did see 61 businesses failing in the UK.

In January, Bain and Co. forecasted  a modest performance for personal luxury goods in 2024, predicting growth in the low to mid-single digits, according to existing projections. The consultancy emphasized that, during this slowdown in growth, brands must focus on maintaining profitability and controlling expenses throughout their operations. Bain added, “This can include initiatives targeted at higher accuracy of business planning and demand forecasting with the help of artificial intelligence, tighter inventory management, cost variabilization, and more.”

Despite the grim outlook, Statista  projects that the luxury goods market will generate revenue of $368.90b in 2024, growing at an annual rate of 3.22% through 2028. The United States is expected to lead this recovery, contributing significantly to the global market. The figures suggest a potential rebound for the industry in 2024 if the brands adapt to changing consumer behaviors.

Ted Baker and the Luxury Market

As Ted Baker stands on the brink of collapse, the company’s fate is attached to the larger business environment. UK retail fashion has been volatile while the luxury goods industry in Europe seems to be struggling based on the stock market performance. The pandemic has accelerated changes in consumer behavior and new initiatives that involve AI could be incorporated in the businesses moving forward.

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