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When it made several unsolicited offers to buy a Ted Baker, private equity group Sycamore Partners may have hoped to pick up the UK fashion business on the cheap. But it's now likely to have to pay much more than it hoped as it continues to take part in the bidding process.
Ted Baker said in a stock exchange statement on Wednesday that Sycamore has indicated it’s still interested in being part of the formal sale process, despite speculation that it might drop out now that the company has officially put itself up for sale and the price is therefore likely to rise.
The statement said: “Further to the announcement made on 4 April 2022, Ted Baker PLC confirms that Sycamore Partners Management LP will participate in the formal sale process. As such, Sycamore is no longer required [under stock exchange rules] to announce, by no later than 5.00 pm on 15 April 2022, either a firm intention to make an offer for Ted Baker or that it does not intend to make an offer.”
Ted Baker remains in turnaround mode having been working hard to recover from a series of problems both caused by the pandemic and by missteps of its own. But the company seems to be on the right track.
Despite its share price plummeting from the highs of 2015 when each share traded at almost £28, it clearly retains some appeal for private equity groups looking to profit from its recovery.
A few weeks ago, Ted Baker said it had rejected two successive unsolicited offers from Sycamore as they undervalued the business. But it also received an “improved proposal” from the group, as well as “other unsolicited third-party bid interest”.
It didn't disclose what the third offer from Sycamore added up to, but earlier reports said the group had initially offered £1.30 per share offer, valuing the business at £250 million.
The company's share price has struggled in recent years and was hit hard by the pandemic, falling as low as a little over 70p during 2020. However, the share price had recovered somewhat, but was still only at 80p in February. It subsequently began climbing and the Sycamore news sent it higher still. The shares were trading at around £1.50 each on Wednesday morning, valuing the entire business at almost £272 million.
It's still not known who else is interested in buying the company and whether any other retailers might be prepared to throw their hats into the ring.
ASOS on Tuesday said it’s still seeing rising sales, while it made a profit in line with guidance. But the figures were muted and it warned that the external environment is riskier than usual at present.
It delivered 4% revenue growth (on a constant currency — or CCY — basis) and £14.8 million of adjusted pre-tax profit in the six months to the end of February, “despite industry-wide supply chain constraints impacting stock availability and ongoing Covid-19 restrictions”. Some analysts had expected revenue growth to be even lower.
The company said it saw strong operational progress in the year to date, with its H2 stock position “materially enhanced, driving increased newness and availability”.
And apart from the removal of Russia's contribution to the second half, its guidance is unchanged, “although an increasingly challenging external environment introduces a greater degree of risk than normal”. Russia usually accounts for around 4% of sales.
Group revenues rose to £2.004 billion (the first time they topped £2 billion). That may have been a 4% CCY rise, but it was only 1% in total.
The gross margin was down to 43.1% from 45% and the operating loss was £4.4 million after an operating profit of £109.7 million a year ago. Adjusted EBIT was £26.2 million, down 77% on the year, and the reported pre-tax loss was £15.8 million (down 115%). Although it made an adjusted pre-tax profit, as mentioned, that £14.8 million was 87% lower than a year ago.
But it saw a continued increase in active customers to 26.7 million, up 0.3 million.
Yet even with reduced stock availability, both the UK and US “delivered a strong performance”. However, EU sales growth was weaker and rest-of-world (ROW) sales fell on delivery challenges. That was a similar ROW story to that recently reported at rival Boohoo Group.
UK total sales grew “a pleasing” 8% to £895.5 million on recovering demand for going-out wear.
Europe rose only 1% CCY to £577.4 million, due to supply chain constraints, along with continued Covid restrictions. Germany performed well on increased demand for going-out wear, however this was offset by a weaker trading period in France where customers flocked back to physical stores.
The US saw revenue growth of 11% CCY to £252.7 million even with supply chain issues. A strong promotion programme and underlying demand meant its highest ever peak sales month in the US in November. February also saw strong customer engagement.
It expanded its wholesale business in the US further too. The debut of select ASOS brands in two Nordstrom stores and on Nordstrom.com in November was followed by further extensions to two new retail concepts in-store in February.
ROW total sales declined 10% CCY as low stock availability impacted all markets, and delivery lead times remained a constraint, particularly in Australia and Israel.
But on the plus side, the firm saw continued triple-digit sales growth of its Topshop brands (+193% year-on-year), and they were “particularly strong” across the UK, US and Germany.
ASOS said it enters the second half with a “much-improved stock position driving increased newness and availability”.
And it has plenty of growth initiatives too. The successful UK rollout of Partner Fulfils in H1 will be followed by range extension and expansion to Europe by the end of FY22.
It highlighted the “highly successful optimisation of the Premier offer, supporting 24% growth in Premier subscribers”. It has also seen “continued improvements in data science to further personalise the experience”, and the next phase of data evolution and investments are under way in support of the Data Strategy.
As mentioned earlier, it sees some challenges ahead. It won’t be getting any sales from Russia for the foreseeable future and it said it sees “greater risk in H2 than normal as the full impact of recent inflationary pressure on consumers and the potential impact on discretionary spend are yet to be felt”.
But it still expects sales growth to accelerate during the current half.
Staffordshire-based ecommerce platform Moot has raised $18m (£13.8m), led by Espresso Capital, for its online sales unification service.
Moot’s platform allows companies to manage sales across different channels in a single place. It was founded in 2019 by ecommerce brand owners who had struggled to scale with the limited technology services provided by the likes of Shopify.
The company provides clients with a centralised database so that retailers can clearly monitor the activity of sales across all of the fragmented ecommerce landscape.
The startup will be putting the new funds towards expanding its AI tech for greater automation in activity analysis.
Moot’s digital tools were originally designed by company founder Nick Moutter exclusively for his own online store, Olivia.
“When starting that business, we needed a whole host of technology and tools. We decided to build most of what we needed from scratch, rather than licensing it,” Moutter said.
When other online sellers started approaching Moutter to use his company’s custom-made tools, he officially founded Moot.
“We realised there was a huge demand in industry,” said Moutter, particularly among companies in “the second stage of growth, where they are hitting the ceiling of Shopify, and looking for more advanced solutions to scale”.
Espresso Capital MD, Will Hutchins, said that Moot’s “unique platform combining operational capabilities, advanced user experience, and customer acquisition technology is attracting a growing list of tier-1 global clients”.
“The rapid growth in ecommerce presents a terrific opportunity for Moot and we believe the company has the right team and technology platform to become a global EaaS leader.”
Moot’s growth has been rapid since its formation, with annual recurring revenue expected to hit £100m this year after bringing on major retail clients like Asos and Timberland.
The company previously raised £5m in seed funding in July of last year, in a round led by Fuel Ventures.
March UK consumer spending held up well, a new report said on Friday, and fashion “soared” above other sectors as consumers renewed their wardrobes for the spring season.
That’s according to BDO’s High Street Sales Tracker (HSST), which said that March saw the 13th consecutive month of retail sales growth, a new record. Year-on-year total like-for-like sales (that’s in-store and online) were up 60.9%, although the fact that the UK was in full lockdown a year earlier would have had a big impact in 2021.
The change over the course of last year can be seen very clearly from the fact that non-store like-for-like sales fell via 10.8%, the third month of decline in this area. In March 2021 by contrast non-store sales were up over 157%.
So what about fashion specifically? Total like-for-like sales rose 87% for the month, from a base of +57.5% for the same time last year. Fashion was also the only category to record positive non-store results in March.
Combined with other information – such as Kurt Geiger saying that the multi-year trend away from high heels has gone into reverse in recent periods and several retailers highlighting increased searches for swimwear – the fashion figures in March suggests that consumers really are embracing the opportunities now available to them.
Special events such as weddings and other dressy occasions are happening in large numbers and consumers also seem to have overcome their nervousness about contact with others and are socialising more actively again. Holidays are also back on the agenda. It's all helping fashion sales, as is the acceleration of the return to workplaces.
While both fashion and lifestyle categories saw substantial sales, homewares saw its first fall since April 2020.
On a weekly basis, cross-category sales in the first week of the month saw growth of 48.31% from a base of +4.53% for the same week the previous year. And the second and third weeks of the month saw increases of 60.87% and 94.31% respectively. In the final week of March, the rise was 76.13%.
Sophie Michael, Head of Retail and Wholesale at BDO, said: “Our results in March have highlighted that consumer spending remains high despite impending increases to the cost-of-living this month. However, there are also concerning signs that some of this spending is being supported by record levels of household borrowing, which has increased lately even as consumer confidence plummets. There may be good reason to expect some pull-back in discretionary spending over coming months, though the impact will inevitably vary across different areas of retail.
“Rising energy, operational and supply costs also pose a serious challenge for retailers, many of whom may look into raising prices and/or re-examining their supply chains, as they seek to mitigate these issues and make cutbacks where possible. While the cost-of-living crisis was largely still on the horizon in March, retailers have been planning ahead and have made allowances for higher levels of inflation. However, the forecasts only appear to be increasing so the question is whether costs will rise faster than initially anticipated and cause further disruption.
“This myriad of issues will no doubt require retailers to reconsider their plans as the consumer purse comes under increasing pressure.”
Stella McCartney is continuing her Disney collabs and has just unveiled a new collection linked to 82-year-old movie Fantasia. It’s described as “an unexpected collaboration playfully blending fashion and fantasy, embodied in a unisex capsule of irreverent pieces – reflecting a desire to escape reality, transporting a new generation to an illusory world inspired by the classic Disney animated film”.
In practice that means taking the film’s imagery and turning it into wearable summer pieces with a heavy focus on sustainable materials.
For now it’s an adults-only collection, but a kids’ capsule will also be launched this autumn.
Aligned with the designer’s love of nature, the summer offer is priced from £50 up to £2,500 and includes “elevated fashion pieces” that reference Fantasia’s “transcendental beauty and iconic characters”, including Mickey Mouse hand motifs and rare posters from the 1940s. And they’re on limited-edition repurposed old-stock silks from LVMH’s Nona Source.
There’s also knitwear featuring Mickey and broomstick-man graphics, linking to the film’s most famous segment, The Sorcerer's Apprentice, alongside satyr scenery from The Pastoral Symphony.
Reinterpreting the film’s night skies and Summer 2022’s glitter, advanced bodycon knits also come with PVC-free sequins.
Add in organic cotton towelling on fringed kaftans with washed-out centaurette prints, and original warped and remixed Disney graphics on dresses giving the effect of patched-together vintage tees. Then there’s organic cotton denim that taps vintage aesthetics – including eco bleach effect light blue washes and an apricot galaxy wash on utility shirts, boyfriend jeans and a hoodie jacket, with a new Stella logo and Mickey prints on the back.
The collection also takes in accessories with bucket hats, pool slides, sneakers, safari caps, and an extensive bag selection.
There’s a black velvet hard-body shoulder bag shaped like Mickey’s head silhouette, given “a Stella edge” by a mixed-galvanic Frayme chain detail and an Alter Mat vegan leather strap. Falabella mini and shoulder bags also feature Mickey as rainbow patches and crystal embellishments, while Logo totes highlight a new allover black Mickey drawing print.
Growth is great, but growing greener is taking on a new urgency for mid-sized businesses against a backdrop of climate change awareness and uncertainty for our collective future. The UK government is urging SMEs to commit to the Net Zero goal as part of a global campaign, via its UK Business Hub, in order to promote more environmentally conscious ways of working.
While businesses are in growth phase, they still have the power and are nimble enough to make fundamental widespread company changes that can impact the direction of the business for years to come. They also have the power to develop a culture that fosters an environment that takes into account corporate social responsibility from the very beginning of the business’ conception – this is why planting the right seeds at SME size is so important.
SMEs’ combined environmental impact is in many ways more significant than big corporations’, according to recent commentary from The Open University, rendering them a mighty force to be reckoned with and also destructive in their aggregate carbon footprint.
Making changes is easier said than done, though; SMEs are typically less well-resourced and face challenges around implementing practices that make their operations more sustainable. This must be taken into consideration. That said, there is a clear opportunity for the collective firepower of small businesses to gain support from their partners and customers by shifting to a greener mindset communicated through their company culture and rolling out practices that can make impactful long-term changes.
The term sustainability is often thrown around but drilling down into the social aspect of the concept is most relevant for smaller businesses in the growth stage. Mostly the conversation focuses on consumption costs and the environmental side of operations, but for green initiatives to make a real impact and meet compliance standards, businesses need buy-in from their people. Relying on people-power is especially important for mid-sized businesses; for a sustainability strategy to really work, they need to be onboard from the outset. Employee engagement means creating a set of shared values around the issue that everyone can get onboard with, and speaks to individual personal – as well as professional – values.
Sustainable business is about creating practices that can last, and much of this relies on the creation of a solid and nurturing culture. Creating a fabric of shared and realistic values helps motivate a cohort and in turn allows for a much higher margin of productivity. To enact real change, everyone in the business must be on the same page about shared goals and how to get there – a green ethos is achievable this way.
Practical approaches to sustainability are often what’s missing and hard to achieve for smaller businesses – unlike their mighty corporate counterparts, it’s unlikely there’s a dedicated team monitoring for legislation changes like carbon tax rises and impending restrictions. A great way to demonstrate commitment to sustainable business is through investing in carbon offsetting schemes and packages, either locally or internationally. Funding projects that focus on reforesting and rewilding, for example, is a good way to do this.
Taking a step back and viewing the green credibility of supply chains can be a daunting task for SMEs – understanding how each piece of the overall puzzle contributes to your carbon footprint can cause headaches. However, now, many suppliers must be upfront and provide visibility by declaring their carbon emission status, which makes it easier to select the most responsible ones to work with. Making no compromises on your businesses’ shared sustainability values and culture must also apply to your wider supply chain, too.
People are at the heart of a business so their viewpoints on how to move forward in a sustainable way should always be taken into account and used to steer the ship. SMEs may not need to look as closely at carbon emissions produced by business travel programmes, for example, but when it comes to the cost of overheads, measuring consumption has become a lot harder since the shift to hybrid working.
Allowing for flexibility in work location underpins a healthy culture post-pandemic; it gives people the agency to make the best decision about how and where they work to provide the most value to the business. With this in mind, and to ensure flexible working can work from a sustainability standpoint, there are tools available like carbon calculators that can give a better idea of emission production which can help business leaders monitor energy consumption across the workforce.
Introducing a values-based approach for sustainable business is the best way to drive change, ultimately. A culture that openly discusses the best initiatives and routes to take in order to maintain a sustainable business strategy is guaranteed to thrive.
People want to work for companies that do the right thing. And involving them in conversations when it comes to determining the direction of the business is the best way to promote trust in where everyone is heading. Setting common goals on ethical decisions that impact wider communities will help to boost morale and could even mean that people are more likely to stick around to see how the business thrives as it scales up.
Businesses that demonstrate their green credibility and measurement also have a better chance of attracting and securing the next generation of talent, by being clear about their commitment to working in a way that is ethical and aligns with their own values, and being transparent about how they plan to get there if there’s still work to be done. Beyond the practical environmental benefits of sustainable working practices, creating a community culture of like-minded people is certainly the best way for a business to stand the test of time.
Committing to developing a culture built to last starts with a pledge – regardless of where you are in your journey, joining the Breathe Culture Pledge gives you the recognition and resources you need to take your culture to the next step.
March footfall to UK retail destinations showed how tough it has been — and will continue to be — to get back to ‘normal’ post-pandemic. The latest figures from Ipsos Retail Performance on Tuesday showed footfall stays stubbornly down from 2019 levels, even though there are signs of improvement.
The figures are significant because they focus on the non-food area of which fashion is a massive part and they also look specifically at shoppers going into stores rather than just being in the general area.
Across the UK, footfall fell by 22.9% compared to 2019 in the non-food sector for the five weeks up to March 27.
Towns outperformed cities by 8.3% points as city centres continued to struggle, and the best performing region was Northern England where store visits were down by ’only’ 18.6%.
But on the plus side, the UK as a whole was up 9.9% month on month and cities rose 4% while towns were up 11%.
High streets remained over 23% down compared to 2019 but they were up 15.7% compared to February. Retail parks were down only around 15% compared to 2019 and were up 5% against February, while shopping centres were down nearly 24% on a three-year basis and up over 11% month on month.
Oliver Hillier, senior retail analyst at Ipsos Retail Performance, said: “Despite footfall still being down compared to 2019, the unseasonably warm weather had a positive impact on footfall across the UK, with footfall up compared to the previous month.
“However, concerns that the Chancellor’s Spring Statement didn’t go far enough to protect consumers against the rising cost of living will likely impact footfall levels throughout the spring, as many households look to cut back on non-essential items to cover increasing utility costs and the recent rise in council tax.”
JamJar Investments has raised over £100m in its new fund to support early-stage consumer brands across the UK and Europe.
The capital came from institutional investors, founders and a crowdfund including a cornerstone commitment of £48m from British Business Bank’s Enterprise Capital Funds (ECF) programme.
London-based JamJar was founded in 2013 by Adam Balon, Jon Wright, and Richard Reed, the founders of Innocent Drinks which was sold to Coca-Cola for over $700m (£534.4m).
“JamJar is looking forward to helping new category-defining brands win their fight. Consumer consciousness is in our blood, and we are proud to be the first fund to absorb all Seedrs fees meaning our crowd has come in on exactly the same terms as larger LPs,” commented Katie Marraché, partner, JamJar.
JamJar’s first fund was created two days after the founders left Innocent in 2013. Since then it has backed a portfolio of high-performing companies, including What3words, Deliveroo and Oatly. JamJar normally invests between £500,000 to £3m in Seed or Series A rounds.
JamJar’s new fund looks to target 10 investments a year, with half of the fund being reserved for follow up investments.
Founded in 2014, the British Business Bank is the government’s economic development bank that aims to help the UK move to a net zero economy by giving access to finance for small businesses.
The British Business Bank’s main programmes are responsible for providing over £8.5bn of capital to nearly 95,000 small businesses.
“The British Business Bank’s Enterprise Capital Funds programme is key in helping to develop and maintain effective venture capital provision in the UK, lowering the barriers to entry for emerging fund managers and for those targeting under-served areas of the market,” said Ken Cooper, managing director, venture solutions, British Business Bank.
Last week London-based Climate VC launched its impact-first investment strategy.
Ted Baker announced on Monday that it has launched a formal sale process following additional interest after unsolicited bids from private equity group Sycamore Partners.
The news sent the company's shares over 14% higher on the London Stock Exchange and valued it at £271 million.
The company said it had rejected the first two offers that Sycamore made on the grounds that they undervalued the business. But it added that it has now received an “improved proposal” from the group and that since Sycamore originally emerged as being interested in buying the company, it has “also received other unsolicited third-party bid interest”.
The board stressed that it “believes the business is well positioned to create significant value for shareholders” — which could be interpreted both as applying to those shareholders who are the investors that own it as a listed company today, as well as a private equity group or other retailer that might own it in future.
And it said that it continues to make good progress with its transformation and that despite the impact of Omicron on Q4, it delivered sales growth of 35% along with a much better trading margin.
Its statement to the London Stock Exchange also explained its reasoning for the official sale process. “In view of the interest expressed by potential offerors, and having consulted its major shareholders, the board has decided to conduct an orderly process to establish whether there is a bidder prepared to offer a value that the board considers attractive relative to the standalone prospects of Ted Baker as a listed company,” it said.
It didn’t specify what that value might be and it's clear that if it doesn't achieve the right price, it's prepared to continue as an independent, listed business.
The firm has agreed various points with the UK Takeover Panel and one of them is that parties interested in making a proposal will not be required to be publicly identified.
Ted Baker added that it “intends to conduct a targeted process, focused on those parties who understand and value the full potential of this unique brand”. The first phase of the process is expected to be based on public information only and interested parties will be invited to submit non-binding indicative offers to its financial advisers, Evercore and Blackdown Partners.
The company hasn’t yet spoken to Sycamore about whether it wants to be part of this process.
Impact tech startup Again has secured £2.55m in pre-seed funding led by Eka Ventures.
London-based Again is building a decentralised network of automated, micro-cleaning facilities called CleanCell that will allow brands to reuse packaging using automation and robotics.
Again’s CleanCells gives its users data on packaging inventory and cost savings.
The pre-seed investment will be used to build Again’s CleanCell technology and launch three to five CleanCells in the UK later in the year.
Again claims its CleanCells use 76% less water, 90% less energy whilst being able to clean thousands of packaging each month. Its technology, Again says, also means that it costs the same as single-use packaging for smaller brands.
“Reusable packaging is the future but today it’s prohibitively expensive for brands. We’re in the early stages of building a circular economy and we see our role being the infrastructure that underpins the packaging aspect of this on a mass scale,” said Matt Kennedy, founder and CEO, Again.
“This can only be done with buy-in from across the value chain and we’re excited to be working in partnership with renowned brands.”
Additional investment in Again’s pre-seed round came from Maersk Growth.
The startup has partnered with Budweiser Brewing Group, Diageo (Johnnie Walker Black and Smirnoff) and Biffa to launch its pilot scheme.
Its partnership with Biffa will use an electric vehicle provided by Renault to collect waste bottles from Arsenal’s Emirates Stadium, Greene King, Clays and a group of London nightclubs.
Eka Ventures is a $95m early stage impact venture fund.
“Again’s focus on using the existing logistical infrastructure and using technology and data to make reusable packaging as simple and affordable as single-use is exactly the kind of company we look to back at Eka,” said Jon Coker, Eka Ventures.
The funding round is the latest sign of growing appetite among investors for climate tech startups.
Last week, impact venture fund Climate VC launched to invest in 120 UK-based early-stage climate startups in the next three years.
Other impact funds include Elbow Beach Capital’s £20m venture vehicle as well as SIS Venture’s Scottish Impact First fund.
The announcement of Again’s funding builds on a record year of investment for impact and climate tech startups. In 2021, UK impact tech startups raised £2bn, up from £1.7bn in 2020.