Ted Baker secures £79m sale and leaseback deal
Ted Baker has struck a £79m sale and leaseback of its London head office, the beleaguered fashion retailer announced on Monday.
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The company, which last month axed 160 roles after a "very challenging year", is selling its head office, known as the Ugly Brown Building, to a wholly owned subsidiary of British Airways Pension Trustees for £78.75m. The deal is expected to complete in June 2020 and will under generate net proceeds of at least £72m.
Founder Ray Kelvin, who controls around 35% of the business, is backing the deal.
The retailer will remain in office under a short-term lease before entering into an option with BAPT to take a long-term lease in an adjacent, newly-developed property called Bowline.
Alongside the sale and leaseback of the Kings Cross property, Ted Baker also announced that its lenders had agreed to increase the group’s facilities by £13.5m until December 2020.
Rachel Osborne, acting chief executive, called the sale and leaseback a "significant development", adding: "This transaction, and the agreed additional financing, provides further headroom and flexibility, which will support the delivery of our transformation strategy."
The retailer issued four profit warnings last year before sliding into the red in October, its first half-year loss in more than 20 years. It has been hit by falling sales and a £58m accounting error, and in December, chief executive Lindsay Page and executive chairman David Bernstein.
The company said that in light of the coronavirus outbreak, it was too early to provide meaningful guidance for the 2021 full year. But it reiterated prior guidance for the current year of pre-tax profit between £5m and £10m.
Ted Baker also said there had so far been minimal disruption to the supply chain because of the pandemic and that "the significant majority" of its Chinese factors were now operational. The "vast majority" of Ted Baker’s retail stores and concessions - 384 out of a total of 416 locations worldwide - are now closed, however. These represented around 68% of global retail sales in 2020.
The retailer added: "Ted baker’s e-commerce channel has proved much more resilient and the performance in last eight weeks has been up 16% on las year, albeit with some variability across recent weeks."
As at 1000 GMT, shares in Ted Baker had tumbled 25% to 130.10p on another turbulent day for markets. A year previously, Ted Baker was trading at above 1,600p.