Earlier this year, and against the background of the effect of COVID-19, the new executive team at Ted Baker, the listed global British lifestyle brand, laid down a transformation programme - known by the company as ‘Ted’s Growth Formula’ - designed to return Ted Baker to profitable growth.
Before they could do this, the executive team needed to stabilise and enhance the business’ capital and funding base, engaging teams from across Deloitte to help create this platform for future growth.
Supporting Ted Baker’s lenders
Having helped the group to refinance its borrowing facilities in September 2019, teams from Debt Advisory and Restructuring Services supported the new executive team in securing further bank support by way of additional headroom and extended facilities.
This support was important in order to stabilise the group’s financial position, including the disposal of the group’s head office building in London.
The proceeds of that sale were used to reduce the lending facilities and significantly de-lever the group.“
In a fast-moving situation, it was critical to support the executive team in their dialogue and information sharing with the lending syndicate” said Debt Advisory partner Nick Soper.
“Ultimately, Ted Baker was able to demonstrate a robust core business proposition and acted quickly and decisively to raise material new liquidity.”
An issue with inventory
In early December 2019, Ted Baker made a stock exchange announcement that it had identified that the inventory in the group balance sheet had been overstated, impacting on prior results. It engaged a forensic accounting team from Deloitte to undertake an independent investigation.
Following the completion of the investigation, the FY2019 inventory was restated to recognise a c£20m reduction in value to c£206m, with a further c£32m reduction in inventory recognised as a non-underlying expense in the FY2020 results.
“As in any listed company accounting investigation, there are many moving parts, with the timeframe to assess the financial value of any required adjustment being of key importance given the business’ obligation to keep the market updated” explained Amber Andrade, Forensic director.
“Other important aspects to our work included the preservation of relevant information and material such as email data, and explaining our work to lenders, other advisers to the group and the group’s auditors.”
A team from Deloitte’s Audit & Assurance practice was also engaged by the group to support management with a review of the group’s controls over inventory and other areas.
Simon Oaten, Audit & Assurance partner who led the review, commented: “Our recommendations covered a range of areas, from greater segregation of duties, an assessment of general IT controls, through to training programmes across the group’s finance team and we are supporting management with their ongoing design and implementation.”
Deloitte worked swiftly, under tight deadlines, were personable and helped me and the team enormously given the complexity and interplay of the issues we were working to resolve.
Rachel Osborne, Chief Executive Officer, Ted Baker
