The following document analyses the financial performance and position of Ted Baker Plc over the last four fiscal years (2010 to 2013) using ratio analysis.
The Appendix provided shows the balance sheet, income statement and calculated and graphical representation of the ratio analysis.
Overview of 2010-2013 Results:
Profitability: The company has shown good profitability over the years and has been a top performer in its peer group. 2012 saw a shift in revenue mix generated from wholesale vs retail (wholesale % increased) which along with expansion and promotional activities oversees, saw a small decline in overall profitability. This then improved in 2013. …show more content…
The profitability of the company looks to continue in the positive trend due to steady expansion in overseas markets, diversification of supply chain to avoid disruption risks, continuous monitoring of market conditions and inflation etc.
Based on a FAME analysis of 10 peer companies (listed in appendix), the ROSF, ROCE, operating profit margin and gross profit margin has consistently performed higher than average. Ted Baker PLC is one of the top performing retail designer brands over 2010-2013 financial years. Average scores for 10 peer groups (from FAME) are shown as follows:
ROCE (2013-2010 respectively) – [12.8%, 18.3%, 11.4%, 16.8%]
Operating Profit margin (2013-2010 respectively) – [ 3.16%, 3.6%, 6.41%, 8.63%]
Gross Profit Margin (2013-2010 respectively) – [50%, 54%, 60.2%, 62.6%]
1.2 Efficiency Ratio Analysis
The INVENTORT TURNOVER PERIOD (2013) has increased since 2012 and is quite high. The reason for this is an increase in finished and work in progress inventory. The company has taken this approach of holding more inventory to meet its expansion activities and future forecasted demand. However this has resulted in increase in capital expenditure. In comparison to the peer group the INVENTORT TURNOVER PERIOD over 2010-2013 is very high in comparison to peers like Zara (41 days) and GPS LTD (83 days in 2013) but relatively close to peers like NO Ordinary