Peel Hunt slashes target on Ted Baker following profit warning

Analysts at Peel Hunt absolutely slashed their target price on fashion retailer Ted Baker from 950.0p down to 500.0p on Thursday following a far from "ordinary" profit warning from the group.

Earlier in the same session, the fashion retailer had announced that it had swung to an interim loss as it slashed its dividend and warned over its full-year results amid "very challenging" trading conditions.

It also failed to provide fresh guidance.

Following June's "fairly substantial profit warning", Peel Hunt had expected profits to drop to around £15m for the first half, but instead Ted Baker posted an interim loss of £2.7m before exceptionals and IFRS 16, which was "well short" of that forecast.

"Our primary concern is that the Ted brand is losing relevance in its target market and the price point is turning customers off," said Peel Hunt.

"Certainly, market conditions are tough, but others are performing much better. There's no customer backlash here, there's just a question of where are they shopping instead?"

The broker also said that while rectifying issues such as Ted Baker's now more expensive price architecture, lack of "newness" in its collections and heavy department store weighting to wholesale accounts was "doable" - they were far from "a quick fix."

"The question is how quickly management will grasp the nettle and drive creative direction?" said Peel Hunt, which kept its 'hold' rating on the firm unchanged.

Following the company's interims, Peel Hunt assumed less margin attrition in the second half, but its analysts more than halve their full-year underlying earnings estimates to £23m from £51.5m, with a further £6m impact from IFRS 16.