Ted Baker, the popular fashion retailer based in the UK, has revealed that 68% of its annual retail sales are being impacted by store closures due to the ongoing COVID-19 pandemic. However, in a silver lining, the company has seen a substantial increase in e-commerce sales. Additionally, Ted Baker has successfully sold and leased back its well-known headquarters, The Ugly Brown Building, to generate much-needed cash flow.

The deal for the sale and leaseback of the head office in London is valued at £78.75 million, representing almost a 40% premium compared to the property’s last published book value. The net proceeds of approximately £72 million from this transaction will be used to pay off existing debts and significantly reduce the company’s leverage. The sale is expected to be completed in June, pending approval from shareholders.

Founder Ray Kelvin, who owns nearly 35% of the company’s shares, has expressed his support for the sale and leaseback. In addition, Ted Baker has secured a short-term lease for the property, as well as the option to enter into a long-term lease for part of the adjacent newly-developed property called Bowline, Tribeca, St Pancras Way.

Ted Baker has received support from its lending bank syndicate, which has agreed to increase the available funding by £13.5 million until December 18. The company is working diligently to protect its cash flow and has welcomed the 12-month suspension of business rates in the UK.

While the closure of most of its stores has significantly impacted retail sales, Ted Baker’s e-commerce channel has remained strong with a 16% increase in performance compared to the previous year. The company will continue to focus on its e-commerce operations during this period of store closures, actively managing the online service to mitigate the effects.

For the current financial year, Ted Baker has stated that it is too early to provide specific guidance, but it plans to update investors with its results in May. Acting CEO Rachel Osborne highlighted the importance of the headquarters’ sale and leaseback, emphasizing that it was the result of a thorough asset review conducted in recent months. This transaction, along with additional financing, will provide the necessary flexibility and support for Ted Baker’s ongoing transformation strategy.

Useful links:
Ted Baker official website
Definition of leaseback