(Reuters) - Shares in Ted Baker (TED.L) shed more than a third of their value on Thursday, after the British fashion retailer’s second profit warning in four months on the back of what new boss Lindsay Page called the worst business conditions in decades.
The warning underlines the challenges facing Page, who became chief executive officer in April, after misconduct allegations against Ted Baker founder and top shareholder Ray Kelvin. The company also tapped a new finance chief last week.
Ted Baker and other high-street retailers face several challenges: weak consumer demand brought on by political uncertainty related to Britain’s departure from the European Union, heavy discounting and the shift to online shopping.
Other brands have also complained about a tough climate, although the world’s second-biggest fashion retailer H&M (HMb.ST) reported its first quarterly rise in pretax profit in over two years on Thursday.
“We have faced probably the most difficult trading conditions that I can ever recall in 30 years,” Page told Reuters.
Ted Baker, known for suits, shirts and dresses with quirky details, posted a first-half pretax loss partly due to unseasonably warm weather in September.
But wider issues plaguing the sector led it to caution that second-half results could be lower, setting its shares on course for their biggest one-day drop. The stock has more than halved in value since Kelvin stepped down.
“Ted Baker has been thrown onto the market’s discount pile after a shocker of a first half results statement,” said AJ Bell’s investment director Russ Mould.
The profit warning comes days after fast-fashion retailer Forever 21 filed for bankruptcy in the United States, where Ted Baker has more than 30 shops and sells at Bloomingdale’s stores.
In March, Ted Baker reported its first drop in full-year profit since 2008 and in June flagged an “extremely difficult” start to the year as it was recovering from Kelvin’s departure.
Kelvin, 62, who had been CEO since the company’s launch in 1988, resigned in March over claims he presided over a culture of “forced hugging”. He denied allegations of misconduct.
Ted Baker in June said it expected annual underlying pretax profit to be between 50 million pounds ($61 million) and 60 million pounds. Analysts at Liberum cut their full-year 2020 pretax profit forecast by about 39% on Thursday.
The company reported a pretax loss of 23 million pounds, compared to a profit of 24.5 million pounds a year ago, for the six months ended Aug. 10.
The retailer, which has about 500 stores and concessions globally, said its retail operating costs excluding one-time items rose 2.8% to 119.7 million pounds in the reported period.
“Today’s first half update from Ted Baker is a massive disappointment to those who felt that the company’s problems were behind it,” said CMC Markets analyst Michael Hewson.
Reporting by Tanishaa Nadkar and Pushkala Aripaka in Bengaluru; Editing by Bernard Orr and Edmund Blair