The quirky store group and brand notched up a 7.2 per cent increase in retail sales between November 1 and December 24, but a high level of promotions meant gross margins declined by 2.5 per cent year on year.
Ted Baker is now likely to make a full-year profit closer to£19 million than£23 million.
Chief executive Ray Kelvin said Ted Baker’s performance was “creditable” in tough market conditions.
He said: “We expect 2009 to be a challenging year but we are well placed to deal with the difficult trading environment.
“Our brand remains strong with a loyal customer base and our financial strength will allow us to continue to invest in the development of the Ted Baker brand worldwide and to take advantage of opportunities that may arise.”
The retailer reported that it had made a “strong start” to the post-Christmas Sales period and anticipates ending the financial year “with a strong balance sheet and net cash.”