January 13, 2016 / 11:34 AM / 4 years ago

Ted Baker's quirky designs boost Christmas sales

(Reuters) - Clothing company Ted Baker Plc (TED.L) reported strong Christmas sales as its offbeat designs helped to overcome an unusually mild winter that has hurt other British fashion brands.

People shelter under umbrellas as they pass a Ted Baker a store in London, Britain October 06, 2015. REUTERS/Neil Hall

The company's shares rose more than 7 percent on Wednesday morning to rank among the top gainers on the FTSE-250 midcap index .FTMC.

Some of Britain’s hottest November and December temperatures hit demand for winter clothing. As customers refrained from buying warm clothes, retailers such as Next Plc (NXT.L) and Marks and Spencer Group (MKS.L) have reported disappointing sales.

Charles Anderson, Ted Baker’s finance director, said the company’s distinctive brand helped it to offset weak demand.

“It’s not a coat that they buy because they want to keep warm,” Anderson told Reuters. “They see it as an investment.”

Ted Baker’s quirky designs incorporate bright floral patterns, animal designs and polka dots, which analysts say help its clothes stand out from those of its rivals.

“You wouldn’t go past a Next and say ‘Wow, that’s fantastic’, but you would go past a Ted Baker and say ‘That is really exciting.’ And that’s a big part of their appeal,” Liberum analyst Tom Gadsby said.

Unlike many other apparel retailers, London-based Ted Baker has an in-house team of designers, headed by founder and Chief Executive Ray Kelvin.

Kelvin, whose persona comes closest to that of the fictitious Ted Baker, often describes his product as “twice the quality at half the price”.

Ted Baker’s affordable luxury positioning, global appeal and continued focus on a younger audience have helped its shares consistently outperform in a struggling retail sector.

The company, which opened its first store in 1988 in Glasgow, now has outlets in more than 35 countries, from Australia to the United States.

“It has identified a particular audience of younger, trendy consumers who appreciate good quality fashion with a quirky touch,” said Neil Saunders from retail consultant Conlumino.

Ted Baker reported on Wednesday a 10.1 percent increase in retail sales in the eight weeks to Jan. 9.

The company said it had “no significant promotional activity” before Christmas, in contrast to many of its peers that discount heavily in the holiday period.

Ted Baker said it expected to end the year without any inventory backlog, and confirmed its results for the full year would be in line with its expectations.

The stock has risen three-fold in the last 5 years, trading at a premium to most of its peers at a multiple of 30.3 times its 12-month forward earnings, according to data from Thomson Reuters Eikon data.

The company’s upbeat sales and forecast allayed some concerns about the impact of a warmer-than-usual winter, which erased about a quarter of its value since November.

Reporting By Mamidipudi Soumithri and Aastha Agnihotri in Bengaluru; Editing by Anupama Dwivedi, Robin Paxton and Saumyadeb Chakrabarty

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