British fashion brand Ted Baker to close stores, cut jobs amid financial woes

LONDON: The high-end British fashion chain Ted Baker announced plans to shut down fifteen of its stores across the United Kingdom (UK) on Sunday.

The company’s choice to close stores and reduce staff comes as it struggles with financial problems worsened by its inability to handle significant debts. Experts point to various factors like consumer demand, competition, regulations, and market trends as contributing to these challenges.

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The financial difficulties were heightened by the fallout from its founder Ray Kelvin’s departure in 2019 amid misconduct allegations.

Ted Baker’s closure will lead to more than 200 job losses. The high-end clothing brand currently operates 46 stores across the UK and Europe.

In addition to broader issues, Ted Baker has encountered specific financial setbacks, including an accounting error and a series of profit warnings. An accounting error refers to inaccuracies in financial records and can greatly affect a company’s grasp of its financial status and performance. Similarly, profit warnings serve as alerts of potential financial difficulties, indicating to investors that a company’s profits are projected to fall below anticipated levels.

Executives appointed by Ted Baker’s European retail and online division Teneo devised financial plans to close eleven under-performing stores by April 19, displacing over 120 employees. These closures include outlets in prominent locations such as Birmingham, Oxford, Liverpool, Leeds, Bristol, Nottingham, and Milton Keynes.

According to sources, despite efforts to negotiate rent reductions, those overseeing the process determined that these outlets were unlikely to attain profitability and decided to shut down entire stores.

As part of broader cost-cutting initiatives, an extra 25 positions will be eliminated at the company’s headquarters. Moreover, four more stores are scheduled to shut down in the upcoming weeks, following notifications from landlords.

Despite the nationwide closure, the owner of Ted Baker’s intellectual property will continue to pursue a new operating partner for the retail and online business in the UK and Europe.

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A company spokesperson described the closures as “regrettable but necessary”. The spokesperson stated that the decision aims to bolster the business’s financial performance amid ongoing negotiations with potential operating partners.

Experts state that the brand’s failure to adapt to shifting consumer tastes and ineffective marketing strategies have impeded its competitiveness in the market.