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Ted Baker Sales Jump as Return-to-Office Wave Spurs Demand for Formal Wear

Shoppers walk past a Ted Baker store on Regents Street in London, Britain December 17, 2018. REUTERS/Simon Dawson
Shoppers walk past a Ted Baker store on Regents Street in London, Britain December 17, 2018. REUTERS/Simon Dawson
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Ted Baker Sales Jump as Return-to-Office Wave Spurs Demand for Formal Wear

Shoppers walk past a Ted Baker store on Regents Street in London, Britain December 17, 2018. REUTERS/Simon Dawson
Shoppers walk past a Ted Baker store on Regents Street in London, Britain December 17, 2018. REUTERS/Simon Dawson

British fashion chain Ted Baker reported higher sales and a smaller loss for the first half of the year on Thursday, as it navigates a bumpy recovery from the pandemic.

Demand for formal and occasion wear pushed group revenues up nearly 18% year-over-year in the 28 weeks to Aug. 14, the company said, as rising vaccinations in Europe and America drove many back to offices.

"Occasionwear has seen a strong pick-up across men's and women's collections," Chief Executive Rachel Osborne said in a statement, adding that sales of formal wear and suiting had also risen.

Osborne has been steering the upmarket retailer through a three-year turnaround strategy focused on cost cuts, refreshing its product range and boosting its online presence.

Group revenues were, however, still down 36% compared to pre-pandemic levels in 2019. Ted Baker said the pace of the recovery had been uneven as the pandemic continues to affect footfall at retail stores.

The company did not provide annual financial forecasts but said it was "comfortable" with analyst expectations for the current financial year.

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Birkenstock Results Beat on Resilient Demand, Forecasts Margin Recovery

A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
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Birkenstock Results Beat on Resilient Demand, Forecasts Margin Recovery

A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)
A Birkenstock shoe is displayed at Birkenstock shoe store in London, Britain, October 11, 2023. (Reuters)

Birkenstock beat market expectations for fourth-quarter results on robust demand for its pricey footwear and forecast a recovery in margins in fiscal 2025, sending the company's shares up 7% on Wednesday.

With fresh styles becoming a priority for consumers, Birkenstock's sandals and closed-toe clogs have drawn new customers both at its own stores and at retailers.

The company bypassed steep discounting trends evident during the holiday shopping season, which Birkenstock executives said was off to a strong start globally.

"The expansion of ranges into more closed-toe silhouette has helped boost revenue, given that they offer multi-season wear," Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.

Germany-based Birkenstock's average selling prices across its product range were up 8% in fiscal 2024, in part due to higher sales of clogs, the company said, adding that closed-toe styles now made up about a third of its business.

The company has invested in expanding its global store presence and increasing manufacturing capacity this year to meet demand.

While it led to a 330-basis point drop in gross margins in fiscal 2024, Birkenstock forecast a recovery in margins in fiscal 2025 as it ramps up production from new facilities.

The company reported fourth-quarter revenue of 455.8 million euros ($478.27 million), compared with the average analyst estimate of 439.2 million euros, according to data compiled by LSEG.

However, Birkenstock's forecast for fiscal 2025 revenue to increase between 15% and 17% was below estimates of 17.5% growth.

"It would appear with this incredibly healthy growth, the company is choosing to adopt a conservative approach that they expect to be able to meet and beat," BMO Capital Markets analyst Simeon Siegel said.

On an adjusted basis, Birkenstock earned 0.29 euro per share, beating estimates of 0.26 euro.