Ted Baker famously hasn’t got to where it is today, after 25 years of existence, by spending lots of money on advertising and PR.

Ted Baker famously hasn’t got to where it is today, after 25 years of existence, by spending lots of money on advertising and PR.

Back in 1988 Ted Baker started out as a humble retailer of men’s shirts, but look at it now: its worldwide brand sales at retail value were estimated at £520m last year and this year it will do well over £600m (of which some 35% comes from overseas).

By year-end, Ted Baker expects to have 363 stores and concessions around the world, of which just over half will be outside the UK. 

And menswear isn’t that important any more. In the first half of the financial year 58% of Ted Baker’s revenue came from womenswear and a lot of the new space being opened overseas is womenswear only, for instance the department store concessions in Spain and much of the concession business in Bloomingdales in the US.

And the Ted Baker brand (pitched as “No Ordinary Designer Label”) stretches easily into accessories, with eyewear a great success, as well as footwear, kidswear, toiletries and fragrances.

The group’s success has been recognised on the stock market. The current market capitalisation of over £800m is about as big as JD Sports and Mothercare combined, by way of example.

The share price took off after the bumper AGM trading update in June (when group sales were reported to be running up by an amazing 32.7%) and it has been sustained today by interim results which were even stronger than expected.

Underlying pre-tax profit was up 33% to £12.5m, which is impressive progress, even though the cost of the 5thAvenue New York flagship store opening depressed last year’s first half outcome a little.

Retail sales per sq ft rose by 15% in the first half in the core UK and European business and by 22% in the fast-growing North American business

So why is Ted Baker doing so well as a global brand? Of course, the words usually used to describe Ted Baker are not “amazing” and “impressive”, but “wacky” and “eccentric”, as the company is well known for the unconventional design of its annual report (this year’s front cover was emblazoned with “Fashionomics”: “natty numbers that look as fine as Ted’s clothes”) and the unusual name of its head office (‘the Ugly Brown Building’).

And the reclusive but affable Ray Kelvin, Ted’s alter ego and the founder and chief executive of the business, is famously never photographed without his face being partly hidden.

But all these eccentricities have helped to create the cult feeling to the brand, and beneath the wacky exterior lies a shrewd business model that balances retail with wholesale exposure, and a strong market niche between the bottom of the luxury designer market and the top of the high street fashion market, where the competition is surprisingly limited.

Not everyone would pay £65 for a men’s polo shirt, £80 for a men’s work shirt or £400 for a suit but, compared to the prices charged by luxury brands like Tom Ford or Ralph Lauren, Ted Baker looks a bargain and the formula of high quality, well designed and distinctive clothing at a good price has been a success around the world.

Who needs to spend a fortune on advertising? Word of mouth can get you a long way and these days Ted Baker is very active in social media, to underpin the cult personality of the brand, and the stores promote the distinctiveness of the business with eye-catching design and humorous touches.

So the success of Ted Baker is all about the product and design and Ray Kelvin has done a great job of maintaining and promoting the unique culture of the business. And when it comes to global potential, as Ted Baker puts it, “the world’s your lobster”.

  • Nick Bubb has been a leading retailing analyst for over 30 years. He is a well-known commentator on UK retailing and is a founder member of the influential KPMG/Ipsos Retail Think-Tank.