Ted Baker has turned to an equity raise as it struggles to survive amid the coronavirus pandemic.
The London-based luxury brand announced today that it has shored up 105 million pounds, or $130.47 million at current exchange, in new equity as the COVID-19 health crisis continues to batter its balance sheet. Included in that share placement is 10 million pounds, or $12.43 million, through an offer for subscription (or an invitation to the public to buy new shares in the company) for 126.7 million shares at 75 pence each, or 94 cents — a 51.1% discount on its closing price at the end of May.
It announced its plans for the share placement on the same day it released its quarterly numbers early this month. “The capital raising forms part of a holistic financing package and broader strategic transformation plan to navigate the challenges of the global coronavirus pandemic and return the company to profitable growth,” it wrote in a statement at the time.
The funds will be used to keep the company afloat after it posted disappointing financial results: Ted Baker reported a 92.4% year-over-year decline in underlying pre-tax profits to 4.8 million pounds, or $5.96 million. Plus, in late January through the start of May, revenues declined 36%, while total retail sales — including e-commerce — were down 34% as a result of widespread store closures.
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The British designer label also intends to invest more of its resources in digital as part of a new three-year transformation plan unveiled by CEO Rachel Osborne. According to the company, online sales have grown by 78% year over year since March 22 — the day before lockdowns were instituted in the United Kingdom.
The emergency fundraising also comes two weeks after founder and former CEO Ray Kelvin cut his stake in Ted Baker by 55% to 15.8%. (Kelvin served as executive chief at the brand until last March, when he resigned following accusations of misconduct and inappropriate physical contact with staff. He has denied all allegations.) Investment firm Toscafund Asset Management nearly doubled its stake to 26.4%, overtaking Kelvin as the company’s largest shareholder.