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Ted Baker plc

The Ugly Brown Building
6a Street Pancras Way
London, NW1 OTB
United Kingdom
Telephone: (44 20) 7255 4800
Fax: (44 020) 7255 4962
Web site: http://www.tedbaker.co.uk

Public Company
Incorporated:
1988
Employees: 985
Sales: £117.83 million ($200 million) (2006)
Stock Exchanges: London
Ticker Symbol: TBK
NAIC: 448110 Mens Clothing Stores; 424320 Mens and Boys Clothing and Furnishings Merchant Wholesalers; 424330 Womens, Childrens, and Infants Clothing and Accessories Merchant Wholesalers; 448120 Womens Clothing Stores

Ted Baker plc is the company behind one of the United Kingdoms fastest-growing and most global designer brands. The quirky London-based company has developed a strong portfolio of brands based on the fictional Ted Baker personality. The companys clothing ranges include the flagship Ted Baker, Ted Baker Women, boyswear brand Teddy Boy and upscale classic brand Edward Baker.

While the company has focused on developing the Ted Baker character, it has avoided costly traditional advertising efforts, instead relying on word-of-mouth referrals and customer loyalty to generate sales. The company has also built its own network of stand-alone retail stores, in part as a showcase for its clothing designs. In the United Kingdom, Ted Baker directly operates more than 20 stand-alone storeseach of the companys stores features its own design, and many are designed to suggest that the customer has entered the Ted Baker characters home.

Ted, as the company calls itself, also operates a growing number of international stores, including seven stores in the United States. Since 2006, the company has also entered the Far East, in partnership with Singapore-based RSH Ltd., opening its first store in Hong Kong in October 2006. The company plans to add stores in Dubai, Singapore, Bangkok, and Jakarta through 2007. In addition to its stand-alone stores, Ted Baker operates concessions in more than 70 department stores in the United Kingdom, and nearly ten outlet stores. While retail sales account for the largest part of the companys annual revenues, Ted has also built a strong wholesale business, supplying its branded products to an international network of trustees, as the company calls its base of retailers, including stores in the House of Fraser and other major U.K. retail groups. The company has also negotiated a range of licensed goods, including perfume, eyewear, and other accessories. The Ted Baker concept is the brainchild of Ray Kelvin, who founded the company in 1988 and remains its CEO. Ted Baker is listed on the London Stock Exchange and posted sales of £117.83 million ($200 million) in 2006.

CREATING A BRAND PERSONA IN 1988

Ray Kelvin, named Raymond Kaufman at birth, was born in 1956 into a clothing retailing family; his grandfather had fled to London to escape Nazi persecution in Europe, and he later opened a clothing shop in Edmonton. Kelvinwhose surname was changed presumably as way of avoiding anti-Semitismwas not a brilliant student, and even flunked his business studies courses while at school at Middlesex Polytechnic. Yet Kelvin went into business at the age of 18, setting up his first company in 1973. As he told Design Week: When they put pound signs in front of me, the figures all made sense. Called PC Clothing Ltd., that company operated as a wholesale womenswear supplier to the United Kingdoms high street retailers, and especially to the Burton retail group. Design Week described the companys production as bland, middle-of-the-road clothing to be sold in mass-market womens chain stores. As Kelvin himself told that magazine, My background is producing faceless products for faceless retailers. Id got caught up in this area of nothing.

By the 1980s, Kelvin had grown tired with this life and he began developing a new clothing concept. These early years of his career paralleled the rise of a number of strong, international designer brands that had established themselves as much for the marketing of their image as for their clothing designs. Additionally, while clothing brands had traditionally been associated with their manufacturers, more and more of the new breed of labels existed entirely as a design and marketing entity, with production outsourced to third-party manufacturers. Kelvin recognized the potential for developing a new brand, based on his own designs, with a strong commitment to detail and high quality.

Kelvins idea was to take the designer label concept one step further: instead of creating a new label, he decided to create a new designer. This led to the development of a fictional character, named Ted Baker. By 1987, Kelvin had sold PC Clothing to its managers and was looking for a partner to develop his new clothing concept, which initially targeted the mens shirt market.

In 1988, Kelvin, joined by finance director Lindsay Page, opened the first Ted Baker store in Glasgow. Lacking funds to launch an advertising campaign, Kelvin instead focused on generating word-of-mouth attention. A major part of that effort was the companys quirky interior decor and window dressings, which featured the evolving Ted Baker persona. Kelvin himself preferred to remain in the background, calling himself the closest man to Ted, refusing interviews, and not allowing his photograph to be taken in order to focus attention on the Ted Baker character.

Soon after its launch, Ted Baker found a financial partner for its further development, selling a controlling stake to retail group A. Goldberg & Sons for £1.1 million in 1989. Kelvin nonetheless remained at the head of the company in order to guide its development and the Ted Baker brand. By 1990, the company had opened stores in Manchester, Nottingham, and London. When Goldberg went into receivership that year, Kelvin seized the opportunity to buy back control of the company.

Kelvins reliance on word of mouth meant that growth was slow at the company into the early 1990s. Nonetheless, the high quality of the Ted Baker designs began building a loyal customer base. The company also added a second label, Blue Baker, in 1992. Into the middle of the decade, the company rolled out several more stores, reaching a total of seven stores by 1997. These included new stores opened in West Soho, London, and in Leeds in 1993, and in Liverpool in 1994. The company also opened its first in-store concession during this period, at the famed Harrods department store. At the same time, the company had been expanding its clothing line to include a wider variety of mens clothing items.

COMPANY PERSPECTIVES

Our mission is to build a successful company through the creation of a leading designer brand, by conducting ourselves in an efficient and courteous manner and by maintaining Teds high standards and integrity. We pride ourselves on being in a position to satisfy the needs of our customers. In order to protect the ethos and persona for which we have gained an enviable reputation. We always ask ourselves the question WOULD TED DO IT THAT WAY?

Yet Ted Bakers focusand Kelvins geniuswas to look beyond traditional retail operations, and even beyond the designer market. Instead, the company concentrated on developing itself, as one analysts described it, as a sourcer of products with strong sales potential. Billing itself as No Ordinary Designer Label, the company continued to avoid advertising, instead developing a series of in-store promotions, such as contests and other competitions that required customers to return to the store to collect their prizes. Another promotion was the offer of free laundry services for each shirt sold. The promotion, which ran for two years, was highly successfulone customer was said to have purchased 70 shirts during the run of the promotion. In this way, Ted Baker not only achieved a strong degree of return visits, but also raised its own profile.

Ted Baker soon sought to expand past its own retail operations and accordingly launched a wholesale wing in 1994. This new division then began building a national network of clientscalled Ted Baker Trustees by the companywho were screened and selected by the company to carry its shirts and other clothing designs. While many of these trustees were independent retailers, others were part of major retail groups, such as the House of Fraser.

GOING PUBLIC IN 1997

The move into wholesale prompted the company to expand its range. In 1995, the company entered the womenswear market, adapting the Ted Baker concept as Ted Baker Woman. This launch was backed up by the opening of the first Ted Baker Woman retail stores in Covent Garden and Leeds in 1996. That year, too, the company added a boyswear line, called Teddy Boy. These additions played a role in the companys first move into the international market, with the launch of wholesale operations in the United States. For this, the company formed a partnership with that countrys Hartmarx Corporation. Ted Baker next turned to the European continent, establishing its first store in Zürich, Switzerland, under a franchise agreement, in 1997.

That year marked the companys emergence as a public company, with a listing on the London Stock Exchange. In keeping with the groups willingly quirky image, the company adopted the trade name of Ted Baker No Ordinary Designer Label Limited. The public offering provided funding for the refurbishment of a number of company stores. It also served as a springboard for the extension of the companys retail network into the United States, where its first standalone shop opened in New York City in 1998. That year the company also extended its clothing range to include new Skinwear and Underwear lines.

These extensions were often developed through partnerships. The Skinwear line, for example, was developed in partnership with skin care specialist King of Shaves. Meanwhile, the company was enjoying success with the launch of its upscale tailored mens clothing line, Edward Baker. The following year, the company debuted its Ted Baker Woman fragrance. These additions help shift the groups revenue balance away from its historic core of shirt sales. By 2000, that clothing segment represented only 30 percent of total sales. While mens clothing continued as the companys major revenue generator, womens clothing sales had grown to 35 percent of total revenues by then.

By then, too, Ted Baker had expanded its international operations to France, Spain, and Sweden, establishing franchise operations with local partners in those markets. The companys U.K. retail network had grown to 11 stores, including a new flagship store at the Bluewater shopping center in Kent. The company had also added two new lines, the licensed Ted Baker Footwear, and the Teddy Girl counterpart to the Teddy Boy line. These were followed by the launch of two new licensed lines, Eyewear and Jeanswear, in 2001.

INTERNATIONAL GROWTH IN THE NEW CENTURY

Ted Baker expanded into the airport concessions market in 2001, opening its first airport store at Gatwick Airport. This was followed by new stores in Heathrow airport, as well as stores in Sheffield, Paris, Covent Garden, and, by the end of 2002, San Jose, California, and Miami, Florida in the United States. Further additions to the groups retail network included a concession in Pariss Samaritaine department store, a three-story flagship store in Manchester, and stores in Bicester and Kings Road, all opened in 2003.

KEY DATES

1973:
Ray Kelvin founds PC Clothing, supplying womenswear to the U.K. wholesale sector.
1988:
Kelvin sells PC Clothing and founds designer label concept Ted Baker, opening first store in Glasgow.
1997:
Ted Baker goes public with listing on London Stock Exchange.
2006:
First store in Hong Kong opens as part of extension into Asian markets.

Toward the middle of the decade, Ted Baker increasingly eyed expansion of its international operations. The company entered the Australia and New Zealand markets in 2004, and by 2005, the company had reached an agreement with Singapores RSH Ltd to roll out the Ted Baker franchise in the Asian and Middle Eastern regions. The first of these stores opened in Hong Kong in 2006, with further stores slated to open in Dubai, Singapore, Bangkok, and Jakarta before the end of 2007. The company also began preparing its entry into the mainland China market.

Ted Baker continued to test the strength of the Ted Baker brand concept with new product extensions, as well. In 2006, for example, the company teamed up with outdoor equipment group Blacks to launch a collection of Ted Baker labeled camping gear. The company also continued to roll out new fragrances, such as XO in 2006, and new eyewear lines, including new eyeglasses and sunglasses collections launched at the end of that year. These efforts appeared successful, as the company outpaced the U.K. retail sector to post sales growth of 11 percent on the year, boosting total sales past £130 million. Ted Baker, with Ray Kelvin in his shadow, appeared set to claim a spot among the worlds major designer labels in the new century.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

No Ordinary Card Services Ltd.; No Ordinary Designer Label Ltd.; Ted Baker (France) SARL; Ted Baker (New York) Inc. (United States; 66%); Ted Baker International Ltd.; Ted Baker Investments (Jersey) Ltd.; Ted Baker Ltd. (United States).

PRINCIPAL COMPETITORS

NEXT plc; Arcadia Group Ltd.; JJB Sports plc; Bur-berry Group plc; Top Shop/Top Man Ltd.; The Peacock Group plc; Lewis Trust Group Ltd.; The John David Group plc; Mothercare plc; Alexon Group plc.

FURTHER READING

Askin, Ellen, Ted Baker Kicks Back, Daily News Record, May 24, 2004, p. 20.

Brough, Andrew, Clothes Firm Has a Name for Growth, Sunday Times, January 18, 2004, p. 10.

Callan, Eoin, Ted Baker Looks to Build a Global Brand, Financial Times, October 6, 2006, p. 25.

Edelson, Sharon, Ted Baker Looks to Grow Womens Business in US, WWD, July 22, 2005, p. 14.

The Fabulous Baker Boy, Design Week, January 14, 2002, p. 17.

The Fabulous Baker Girls, Optician, November 24, 2006.

Marks, Sarah, Face to Face with the Real Hero of the Ted Baker Story, Evening Standard, October 3, 2002, p. 45.

Ted Baker, Britain, Business Week, October 24, 2005, p. 66.

Ted Baker Fragrances to Roll Out in Far East, Cosmetics International, June 2, 2006, p. 2.

Ted Baker Reports Retail Sales Rise, just-style.com, January 17, 2007.

Ted Baker Starts Asian Expansion, Reports Good H1, just-style.com, October 5, 2006.

Ted Baker plc

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