Struggling fashion brand Ted Baker (TED.L) is raising £95m ($118m) from investors to help it “navigate through the COVID-19 disruption and invest in its future”.
Ted Baker said on Monday it was seeking to raise at least £95m by selling new shares at a steep discount. The company will offer shares at 75p each, compared to Friday’s closing price of £1.58.
The proceeds of the new share issue, plus funds from the sale of Ted Baker’s headquarters, will be used to help pay down debt, invest in online, and fund working capital.
“Today we are excited to launch 'Ted's Formula for Growth', a comprehensive strategy for the Ted Baker brand which is supported by a significant recapitalisation of the business, that strengthens our position and enables us to both execute that transformation, and navigate through the disruption caused by COVID-19,” said Rachel Osborne, Ted Baker’s chief executive officer.
“I am confident that our transformation plan will enable us, Ted Baker, to capitalise on our opportunities and deliver value for all of our shareholders."
News of the fundraise came as Ted Baker reported falling sales and profits. Revenue in the 12 months to 25 January 2020 dropped 1.4% to £630.5m. Profit fell by 15.2% to £307.1m.
The company admitted the performance was “disappointing” and blamed “a challenging external environment as well as significant internal disruption”.
Ted Baker has been reeling from a succession of crises over the last 18 months. Founder Ray Kelvin was forced to step down as chief executive last year after allegations over his conduct and his successor quit in December after a profit warning. The share price has fallen over 90% since its recent peak in February 2018. The company said in January that stock had been overvalued by £58m.
The company’s new turnaround plan aims to help Ted Baker return to growth by cutting expenses, focusing on digital sales, and “re-energis[ing] the brand”.
Russ Mould, investment director at stockbroker AJ Bell, said the turnaround was “as much about repairing its reputation as it is trying to make its products more appealing to a wider range of people.”
Osborne said: “Over the past 6 months our new executive team have pulled together and undertaken a thorough review of the business, identified key opportunities and acted decisively in a number of areas.”
However, Ted Baker said the COVID-19 pandemic had “significantly impacted” recent trading. Sales in the 14 weeks to 4 May were down 36% compared to last year.
Ted Baker’s stock dropped as much as 15% on the updates. The share price was down 8.7% by 9.50am UK time on Monday.