Ted Baker falls into administration, putting 46 stores and 1,000 jobs at risk
FASHION giant Ted Baker has gone bankrupt, putting dozens of stores and hundreds of jobs at risk.
The retailer, which currently has 86 stores in the UK and employs 975 people, submitted a letter of intent a few days ago.
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No Ordinary Designer Label (NODL), owned by Authentic Brands Group (ABG) and trading as Ted Baker, has appointed Teneo Financial Advisory Limited to provisionally manage the brand.
ABG is said to be “in advanced discussions” with potential buyers for the company.
The news comes days after NODL said it planned to appoint administrators, citing the “damage” caused during a partnership and the “significant backlogs” built up during a partnership with Dutch company AARC Group.
No Ordinary Designer Label decided to end its partnership with AARC in January, saying the partner had not kept its promises to inject money into the company.
Benji Dymant, joint administrator at Teneo, said: “The appointment of joint administrators comes seven weeks after the termination of NODL’s operating partnership with AARC on January 29, 2024.
“That decision was made after AARC failed to meet its financial obligations and inject the promised financing into the company.
“The company traded well below expectations in the fourth quarter of 2023 and accrued significant levels of delinquencies.
“This has resulted in the company requiring the protection of a moratorium to continue trading and the director has taken the difficult decision to place the company into administration.”
Mr Dymant added that despite going into administration, Ted Baker will continue to trade as normal “and customer orders will continue to be fulfilled”.
“Ted Baker is an iconic British brand with strong partners around the world,” he said.
Authentic has said it is in advanced discussions with several potential operating partners to acquire Ted Baker’s UK and European operations and return the company to full health.
“We recognize that this is a very difficult and uncertain time for everyone involved and we would like to take this opportunity to thank Ted Baker team members and partners for their efforts and continued support.”
“Authentic has said it is in advanced discussions with several potential operating partners to acquire Ted Baker’s UK and European operations and return the business to full health.”
NODL will continue to trade through both its UK website and stores, while Authentic continues discussions with interested parties.
NOTICE OF INTENT
Earlier this week, on Tuesday, No Ordinary Designer Label filed for administration with a letter of intent.
John McNamara, chief strategy and transition officer of Authentic Brands Group, said: “We wish there could have been a better outcome for Ted Baker employees and stakeholders.
“It is hopefully some comfort to customers that NODL continues to trade online and in stores.
“We remain focused on finding a new partner to uphold and grow the Ted Baker brand in the UK and Europe, where it began.”
ABG said it is exploring various cost-cutting measures to support the company’s “rising” costs in February.
This followed ABG, which also owns Reebok and Juicy Couture, rescuing the high street brand as part of a £211 million deal in 2022.
YEARS OF TURMOIL
Ted Baker fell on hard times in 2019 after founder Ray Kelvin stepped down from his position amid harassment allegations.
Several profit warnings followed and a statement warning that the profits of the listed companies will be lower than expected.
In 2020, the retailer said it would cut 160 jobs, making 2019 a “challenging year”.
Ted Baker is not the only retailer having a hard time on the high street.
Last month, The Body Shop was declared bankrupt, putting hundreds of stores at risk of closure.
On February 29 it announced it would close 75 stores, including in Basildon, Bexleyheath and Carlisle.
Administrators FRP said the retailer would focus more of its attention on online sales and wholesale.
Wilko and Paperchase also both filed for administration last year, which was a blow to the high street.
Hundreds of stores closed and thousands of employees lost their jobs.
CRISIS ON THE HIGH STREET
Retailers have been feeling the pressure since the pandemic, as shoppers cut back on spending due to the rising cost of living.
High energy costs and the move to online shopping after the pandemic are also taking their toll, with many high street stores struggling to continue.
The high street has seen a slew of closures in the past year, with more to come.
The number of jobs lost in UK retail fell last year, but 120,000 people still lost their jobs, figures show.
Figures from the Center for Retail Research show that 10,494 stores will have closed for the last time in 2023 and 119,405 jobs will have been lost in the sector.
It was fewer stores than had been lost in recent years, and a decrease from the 151,641 jobs lost in 2022.
The centre’s director, Professor Joshua Bamfield, said the improvement is “less bad” than good.
While some big names on the high street were lost, including Wilko, many major companies had already gone bankrupt before 2022, the center said, such as Topshop owner Arcadia, Jessops and Debenhams.
“The cost of living crisis, inflation and rise in interest rates have prompted many consumers to tighten their belts, causing retail spending to fall,” said Prof Bamfield.
“Retailers themselves have faced rising energy and occupancy costs, staff shortages and declining demand, making rebuilding profits after extensive store closures during the pandemic exceptionally difficult.”
Besides Wilko, which employed around 12,000 people when it went bust, the biggest failures of 2023 include UK Flooring Direct, Planet Organic and Tile Giant.
The Center for Retail Research said most stores were closed as companies tried to reorganize and cut costs rather than face bankruptcy.
However, experts have warned that more bankruptcies are likely this year as consumers tighten their belts and borrowing costs for businesses soar.
According to official figures, about 14% of bankruptcies last year occurred in retail businesses.
What does going into administration mean?
When a company goes into administration, all control is transferred to a designated administrator.
The administrator must utilize the assets and activities of the company to repay any outstanding debts owed to creditors.
Once a company is placed into administration, a ‘moratorium’ is imposed, meaning no legal action can be taken against it.
Administrators write to your creditors and Companies House to say they have been appointed.
They try to prevent the company from being liquidated (shutdown), and if that fails, pay an equal share of the company’s debts with the remaining assets.
The administrator has eight weeks to write a statement explaining what he plans to do to move the company forward.
This should be sent to creditors, employees and Companies House inviting them to approve or amend the plans at a meeting.
A Letter of Intent is used to inform parties that a company wishes to enter into receivership.
It is a physical document presented to the court, usually by directors who want to prevent a company from being wound up.
Similar to a standard administration process, a letter of intent prevents creditors from taking legal action against a company while they try to put things right.
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