Ted Baker (LSE:TED) has had a dismal year and its share price is continuing to slide. At the time of writing it sits at £3.37, down from a high of £21.20 in January.
Concerns had been circulating in recent months that its stock-to-sales ratio was raising a red flag for investors. It appeared to have a build-up of too much inventory, which is not uncommon in the retail sector. With a higher price point than many of its high street competitors, a weak economy was weighing heavily on the brand.
Last week the company announced the value of its inventory had been overstated by up to £25m, so a law firm and independent accountants have been appointed to investigate.
This bombshell was followed up a few days later with another profit warning and the news that two bosses had resigned. Earlier in the year the company was caught up in a misconduct scandal involving its founder and Ted Baker’s woes have been compounded by the dark cloud hovering over the British high street.
High street hardship
Ted’s clothing ranges are sold through several retailers, most prominently Debenhams, along with House of Fraser and John Lewis.
Its children’s party wear has been a highlight of department store offerings in recent years. But with lower footfall and many of these stores suffering their own series of setbacks, Ted has endured impact from several angles.
Back in August, it announced a partnership with current star retailer Next, beginning in March. This is a give-year deal in which Next will create and sell Ted’s children’s clothing, shoes and accessories, in collaboration with Ted Baker’s creative team. While I think this is a wise move, considering Debenhams difficulties, I do wonder if Next is getting too big for its boots. It now has over 1,000 brands listed on its website, so will Ted’s product lines stand out from the rest or be overlooked?
I think Ted Baker will have a tough road ahead and in such a competitive environment, its product offerings are key to its success. I would forget Ted Baker stock for now.
Make me a millionaire
Although there will always be stock losers to avoid, there are still plenty of stock picks that turn out to be winners, or that simply tick along nicely accumulating wealth for their shareholders.
This is the reason investing in the stock market is such an appealing approach to financial freedom and particularly for achieving personal wealth over £1m.
This is not simply a fly-by-night dream or a lottery win fantasy; many people around the world have become millionaires thanks to their stock market investments.
Making money from the FTSE 100 depends on capital returns from share price appreciation, along with income returns from dividends. By reinvesting your dividends, you are compounding the interest you receive and the overall gains you make. This is the key to long-term wealth generation and reaching that £1m target.
I’d aim to make £1m by choosing FTSE 100 companies with a track record of dividend payment, solid income streams, and a management team with integrity.
