Ted Baker warns on profits as 'extremely difficult' conditions take toll

Ted Baker issued a profits warning on Tuesday as the iconic retailer said it faced "extremely difficult trading conditions".

The fashion retailer said it expected full year underlying pre-tax profits to be at least £10m lower than its own forecasts of £70m, with a new range of £50m - £60m.

The company, struggling to compete with online retailers and the departure of founder Ray Kelvin after allegations of misconduct, said it had been hit by “difficult and unpredictable trading conditions, unseasonable weather across North America (and) a highly promotional retail environment across our global markets”.

It added that management was focusing on product initiatives and cost control in response to the troubling start to the year.

Analysts from Liberum downgraded profit before tax estimates for the current year by 29% to £50.3m, the lower end of the range, as they said a profit warning just 19 weeks into a financial year would come as a surprise to many.

"We believe the short-term and identifiable issues around product are being addressed swiftly but the unpredictable trading backdrop across all markets appears to have less end in sight," the broker said in a note to clients.

"The management are doing what they can targeting the cost base as well as launching a number of initiatives such as faster speed to market, monthly drops and ship from shop. These will be incrementally positive in H2, but heightened promotional activity looks set to remain for some time."

(Writing by Frank Prenesti; reporting by Duncan Ferris)