Ted Baker shares tank as half-year profit drops, warns of challenges

(Reuters) - Shares of Ted Baker (TED.L) fell nearly 14 percent after the British clothing and accessories retailer warned of a "challenging" remainder of the year, while posting a 3.2 percent drop in pretax profit for the first half.

Ted Baker, which operates 544 stores, concessions and outlets worldwide, has been focusing on its fast-growing online and wholesale businesses to offset retail sluggishness as consumers spend less.

The company's stock was down 13.2 percent at 2004 pence on Thursday and was the top loser on the FTSE mid-cap index (.FTMC)

"Whilst we believe that the second half of the year will remain challenging due to external factors, we are well positioned to continue Ted Baker’s long-term development", Chief Executive Officer Ray Kelvin said.

Pretax profit fell to 24.5 million pounds for the half-year ended Aug. 11 from 25.3 million pounds, a year earlier as more promotions to boost sales dragged on margins.

But the promotions helped overall revenue rise 3.5 percent to 306 million pounds, with e-commerce sales surging more than 24 percent to 53 million pounds.

Retail sales were up 1.1 percent, the company said, adding that it was hurt by the hot weather across the UK and Europe earlier this year.

Sales at Ted Baker's wholesale business, which supplies products to stores operated by licence partners, was up over 10 percent and margins improved to 43.4 percent from 40.2 percent last year.

(Reporting by Sangameswaran S and Karina Dsouza in Bengaluru; Editing by Bernard Orr)