Market report

US firm mulls Ted Baker bid | Skipton profits double


Ted Baker lifted by bid talk

Ted Baker

Sycamore Partners Management has confirmed that it is in the early stages of considering a possible cash offer for fashion chain Ted Baker

The private equity group has until 15 April to announce a firm intention to make an offer or walk away for at least six months, unless a rival bid emerges.

Shares in Ted Baker have halved since May 2021 but perked up yesterday afternoon, rising from 87.5p at noon to close at 98.75p after Sky News reported that the American private equity firm was running the rule over the retailer. At 3.30pm today the shares were 16.85p (17.06%) higher at 115.45p valuing the company at £213.4m.

Russ Mould, investment director at AJ Bell says: ““It looks like someone might bring an end to Ted Baker’s horrific time as a listed company. US private equity group Sycamore is weighing up an offer, perhaps drawn to the fact the clothing retailer’s share price had halved between September 2021 and February this year. 

“Sycamore appears to have spotted an opportunity to step in and buy the company while its valuation remains low and to help with the recovery efforts.

“Ted Baker’s latest trading update shows an acceleration in sales growth, improved margins, a small year-end net cash position and encouraging comments from the management. That’s encouraging but the market has yet to be won over by the numbers, so Sycamore must be putting a lot of faith in the company’s turnaround potential.

“There are major headwinds over the coming months for retailers given the inflationary pressures on family finances. Therefore, acquiring Ted Baker now could come with additional challenges beyond those which have already shaken the business for years.”

After spending most of the session under water the FTSE 100 index clawed its way into positive territory and closed 19.39 points higher at 7,404.73 as investors grew in confidence over the course of the afternoon after Chinese leader Xi Jinping condemned Russia’s invasion of Ukraine.

Brent crude was quoted at $107.51 a barrel at the London equities close, up from $106.62 on Thursday.

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7am: Skipton Building Society


Skipton, the UK’s fourth largest building society, said profit before tax more than doubled – up by 129% to £271.8m (2020: £118.8m).

The combined Connells group, its estate agency business, delivered dividends totalling £60m to the society, and during 2021 has already repaid £124.8m of the £253m which was loaned to Connells as part of the acquisition of Countrywide.

The strong housing market, supported by low interest rates and competitive mortgage products, boosted by Stamp Duty Land Tax relief, has driven increased sales across the enlarged Connells group, and led to record mortgage completions by the Society in excess of £5bn, including record lending to first time buyers.

Mortgage arrears continue to be low, at almost a quarter of the industry average (0.83%), with only 0.22% of residential mortgages in arrears by three months or more.

The society grew its savings balances by over £1bn to £19.8bn, while continuing to pay savers well ahead of market average rates. Despite the prevailing low interest rate environment, in 2021 Skipton paid an average savings rate of 0.65% to savers, 0.37% above the market average.

David Cutter, Skipton group chief executive, said: “The Society anticipates the current strong competition in the mortgage market to continue for the foreseeable future due to the major lenders holding very high levels of liquidity.”

7am: Wetherspoon

Pubs group Wetherspoon said trade for the last three weeks was 2.6% below the equivalent period in 2019, reflecting an improving trend.

The company posted an 11.8% fall in like-for-like sales for the half year ending 23 January and pre-IFRS16 operating profit, before exceptional items, of £0.5m (2020: £76.6m). The pre-IFRS16 loss before tax and exceptional items was £21.3m (2020: £57.9m profit).

The board has not recommended the payment of an interim dividend.

The company opened four pubs during the first six months and sold or closed six, resulting in a trading estate of 859 pubs at the half year end.

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Global markets

Oil rose sharply and back over $100 overnight and Brent crude futures were up another 2% to $108.73 in early trade after reports of a sale of Russian crude oil to India and continued fears over potential shortfalls in supplies.

The Dow Jones industrial average rose 1.23, the S&P 500 gained 1.23% and the Nasdaq Composite added 1.33%.

In Asia this morning, the Nikkei 225 is 182 points to the good after the Bank of Japan left its reference interest rate unchanged but Hong Kong’s Hang Seng index is 100 points off.

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