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Warmer, Wetter Weather Does Not Fill Me With Hope for this Great Designer

By Malcolm Stacey | Wednesday 17 October 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello Share Twiners. Clothing firms face an uncertain future in my view. Even a company with a high reputation like Ted Baker (TED) does not have shares I would buy at the moment. The company’s latest half-year numbers showed that profits have dipped by 3.2%.

They still came in at £24.5 million and revenue improved by 5.5%. But we all know that’s not the same thing as profit. And it’s not the present and past which concern me, but the prospect of future sales increasing. It seems to me that there are headwinds here.

Scientists agree that British weather is getting wetter. And that keeps people away from the shops. It’s becoming warmer, too, and that discourages folks from buying winter wardrobes. You only have to look around your neck of the woods to realise people do not seem as bothered about their appearance as they used to be. And I bet people are spending more on mobile phones and other nuisances than they are on their duds. This distressing trend is likely to worsen.

People who know about these things rate Ted Baker highly. It feels it doesn't have to spend money on advertising, and it doesn’t. Yet its winter range has been praised. Its clothing is at the luxury end of the market without being too costly. Garments are lauded for their design. Like most wise high street retailers, it is nurturing a strong-online operation. Sales over the net moved up by a quarter to £53 million. But is that enough?

The shares have tumbled quite a way this month and if I held the shares I would wait for a recovery. But I’m not buying in case the detracting points I make above are correct.

See you in the Punter’s Return, I expect.

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