Ted Baker bosses quit

I thought I’d take a quick look at our ranking for Ted Baker, after the latest news that two senior members of their management team are stepping down and they company issued a profit warning, initially causing the share price to drop 36%.

This is also after Ted Baker admitted that they’d overstated the value of their inventory, which was only worth £5m rather than £25m, last week.

Quality & Momentum

Value

As you’d expect, their Quality and Momentum rankings vs our entire stock universe are pretty poor, while their Value ranking is high because of the already depressed share price, that’s been hit by the bad news earlier in the year.

This does show that they’ve managed to generate reasonable returns and cash flow (Profitability) and their sales growth has beaten analyst’s expectations (Revenue). But those are the only positive metrics, besides the Value factors.

There was a similar change back in October when Ted Baker reported it’s poor first-half results and 3 out of 9 of the analysts whose ratings we’re tracking downgraded the stock.

Obviously the issues with the leadership team will be a major distraction too.

Comparing them to their 99 peers (stocks in the Consumer Discretionary sector, in the UK), really highlights their weakness.

If this carries on, I have a feeling that Mike Ashley will have a new acquisition target :sweat_smile:

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Ray Kelvin still has a significant stake, so could be that he makes a bid for it.

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Do you think he’d take it private? I can’t imagine him taking over going down well with public investors, given the accusations that’ve been made against him.

Yeah, I’d be surprised if he wasn’t considering it. He stills owns around 35% of Ted Baker, at the time he stepped down in March the share price was still around £17, as far as I can see there has not been any changes to his holding since. So no outward signal of doubt in the brand or business. Maybe he won’t step in as a CEO, but I can see him somewhere steering the brand back.

Also Lindsay Page resigning is the right move because before becoming CEO he was joint chief operations officer and chief financial officer for more than four years and finance director for 17 years before that. So the blunder happened on his watch.

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I love this post.

It’d be amazing to see more of these, where a particular company is on the news for whatever reason, and then doing a brief analysis on how the show up on your scoring, and what that means.

It’d help validate your scores, give people confidence but also helps people understand how to use the system.

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Thanks! We’ll definitely do more of these and probably some in-depth blog posts that go into a deeper analysis of companies using our scoring too :newspaper_roll:

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That’d be good.

I find the app intuitive to navigate, I don’t find it easy enough to interpret the scoring and translate it into investment decisions.

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The stock’s now up almost 14% in the last 5 days, maybe value investors did see this as a value opportunity.