Final Results

Ted Baker Plc

("Ted Baker", the "Group")

Annual Results Announcement for the 52 weeks ended 26 January 2019

'Resilient performance against very difficult trading conditions'

· Group revenue up 4.4% (5.0% in constant currency) to £617.4m

· Retail sales including e-commerce up 4.2% (up 4.8% in constant currency) to £461.0m

· UK and Europe retail sales up 4.6% (up 4.5% in constant currency) to £315.0m

· North America retail sales up 4.7% (up 7.0% in constant currency) to £125.7m

· Rest of the World retail sales down 4.7% (down 2.9% in constant currency) to £20.3m

· E-commerce sales up 20.4% (up 20.8% in constant currency) to £121.7m

· Selective expansion continued with:

· Two stores in the UK, five stores in the US, one store in Spain and one store in China.

· One outlet in the UK, our first outlet in Italy, two outlets in Germany and one outlet in France

· Further concessions with leading department stores across the UK and Europe

· Licensee store openings in new and existing markets

· Wholesale sales up 4.8% (up 5.7% in constant currency) to £156.5m

· Licence income up 3.1% to £22.1m

· Completed acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC

Acting Chief Executive Officer, Lindsay Page said:

"Ted Baker has continued to grow across each of the brand's distribution channels despite difficult trading conditions across a number of the Group's global markets. This resilient sales performance again reflects the strength of the brand, the talent of our teams, and the quality of our collections.

I would like to take this opportunity to thank each of my colleagues for their outstanding enthusiasm, skill and commitment and our global partners for their support throughout the year.

We have made a number of significant investments to ensure that Ted Baker remains well positioned for long term development. We are excited by our Spring/Summer collections and the Board remains focussed on identifying opportunities in the evolving retail market to further expand the brand."

Committee Changes

Following his appointment as Executive Chairman, David Bernstein CBE has stepped down from the Remuneration Committee to ensure the Group continues to comply with the UK Corporate Governance Code 2018.

www.tedbaker.com

www.tedbakerplc.com

Media images available for download at:

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Notes to Editors

Ted Baker Plc - "No Ordinary Designer Label"

Ted Baker is a global lifestyle brand distributing across five continents through its three main distribution channels: retail (including e-commerce); wholesale; and licensing.

Ted Baker has 560 stores and concessions worldwide, comprised of 201 in the UK, 122 in Europe, 130 in North America, 98 in the Middle East, Africa and Asia, and 9 in Australasia.

We offer a wide range of collections including Menswear; Womenswear; Global; Phormal; Endurance; Colour By Numbers; Accessories; Bedding; Childrenswear; Eyewear; Footwear; Fragrance and Skinwear; Gifting and Stationery; Jewellery; Lingerie and Sleepwear; Luggage; Neckwear; Rugs; Suiting; Technical Accessories; Tiles; and Watches.

Development of the Brand

Our strategy is to enhance our position as a global lifestyle brand by the continuous development of three main elements of our business model:

· Considered extension of the Ted Baker collections to achieve our brand growth potential. We review our collections continually to ensure we anticipate and react to trends and meet our customers' expectations. In addition, we look for opportunities to extend the breadth of our collections and enhance our offer;

· Controlled distribution through three main channels: retail (including concessions and e-commerce); wholesale; and licensing. We consider each new opportunity to ensure it is right for the brand and will deliver margin-led growth; and

· Carefully managed development of existing and new international markets. We continue to manage growth in existing territories while considering new territories for expansion.

Underlying our strategy is an emphasis on design, product quality and attention to detail, delivered by the passion, commitment and dedication of our teams, licence partners and wholesale customers. 

Strategic Report

Chairman's Statement

Introduction

Group revenue increased by 4.4% (5.0% in constant currency)1 to £617.4m (2018: £591.7m) and profit before tax and exceptional items2 decreased by 14.3% to £63.0m (2018: £73.5m) for the 52 weeks ended 26 January 2019 (the "period"). Profit before tax decreased by 26.1% to £50.9m (2018: £68.8m). Performance has been impacted by the very difficult trading conditions throughout the year including competitive discounting across the retail sector, consumer uncertainty, the well-publicised challenges facing some of our UK trading partners and the unseasonable weather across our global markets at different points throughout the period.

Despite this challenging backdrop, Ted Baker continues to develop as a global lifestyle brand reflecting the strength of the brand, the design and quality of our collections and the passion and commitment of our talented teams across the world.

The retail channel performed well, with retail sales including e-commerce up 4.2% (4.8% in constant currency)1 to £461.0m (2018: £442.5m) on an increase in average square footage of 5.2%. Our flexible business model, including a relatively low number of own stores that showcase the brand and our e-commerce business enable us to adapt to structural changes in the retail sector. We continued our controlled geographic expansion with openings across the UK and Europe, North America and the Rest of the World and we continue to invest and build brand awareness in our newer markets for the long-term development of the brand.

Our e-commerce business is an integral and increasingly important component within our retail proposition and has performed well, delivering strong sales growth of 20.4% (20.8% in constant currency)1 to £121.7m (2018: £101.1m) and represented 26.4% of total retail sales (2018: 22.8%). We continue to invest in our e-commerce channels to support further growth.

The wholesale channel performed in line with our expectations, with sales up 4.8% (5.7% in constant currency)1 to £156.5m (2018: £149.2m). This reflects a good performance from our UK wholesale business, which includes the supply of goods to our licensed stores and our export business as well as our North American wholesale business.

Licence income delivered growth of 3.1% to £22.1m (2018: £21.4m). Underlying growth in licence income was 5.5%, adjusting for the acquisition of the footwear licence, which completed on 1 January 2019. During the period, our licence partners opened further stores and concessions in Malaysia, Mexico, Saudi Arabia, Singapore, Taiwan, Thailand and United Arab Emirates. We also opened our first licensed partner stores in the Canary Islands, India, Kazakhstan, Kosovo, and Ukraine.

Resignation of Ray Kelvin and Independent External Investigation

Ray Kelvin took a voluntary leave of absence from his role as Chief Executive Officer of Ted Baker in December 2018, after allegations of misconduct were made against him. Since that date an internal Independent Committee has been in the process of investigating those allegations. The Committee commissioned the law firm Herbert Smith Freehills LLP ("HSF") to investigate the allegations and the Group's policies, procedures and handling of HR-related complaints. Ray Kelvin has denied all allegations of misconduct, however, on 4 March 2019 he agreed to resign with immediate effect from his position as Chief Executive Officer and as a Director of Ted Baker Plc.

The primary focus of the remainder of the investigation will be on Ted Baker's policies, procedures and handling of HR-related complaints. It is expected that HSF will conclude its investigation early in Q2 2019. The Board are committed to ensuring that all employees feel respected and valued. We are determined to learn lessons from what has happened and from what our employees have told us and to ensure that, while the many positive and unique aspects of Ted Baker's culture are maintained, appropriate changes are made.

Board Changes

As recently announced on 4 March 2019, acting Chief Executive Officer Lindsay Page has agreed to continue in this role and I have been asked by the Board to act as Executive Chairman to provide additional support to Lindsay and ensure continued stability in the Group's leadership. I will remain in this position until no later than 30 November 2020, by which time a new Non-Executive Chair will be appointed. Sharon Baylay has agreed to act as the designated Non-Executive Director for engagement with the Ted Baker team members and has also taken on the role of Chair of the Nomination Committee.

Our Teams

Against a backdrop of very difficult market conditions, the periods credible performance is testament to our talented teams across the world, whose commitment and passion remain key to our success. I would like to take this opportunity to thank all my colleagues across the world for their continued hard work as we continue to grow the business and develop Ted Baker as a global lifestyle brand.

IT Systems and distribution facilities

In January 2019 we completed the final phase of the implementation of Microsoft Dynamics AX system across our Asia business. The ERP system has now been successfully implemented globally and will enable improved efficiency and streamline operations.

We have now also completed the transition to our new distribution facility in North America. The new facility will serve our retail, wholesale and e-commerce businesses across North America, supporting our long-term growth strategy in this territory.

This marks the end of a significant period of change for the Group, where it has enhanced its IT systems and consolidated its distribution facilities. These provide a platform that will support the future development of the business including omni-channel initiatives such as ship from store.

Acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC

The acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC from Pentland Group Plc and Pentland USA Inc, the Group's former footwear licensee, was completed on 1 January 2019 for cash consideration of £20.3m, subject to the finalisation of completion accounts. This is an exciting opportunity to drive further growth in our footwear business by leveraging our global footprint and well invested infrastructure. The acquisition is expected to enhance the earnings of Ted Baker from this new financial year.

Licence Partners

We are pleased to have signed two new global licence agreements, with partners who have a global reach and capability. In June 2018 we signed a new men's underwear and loungewear global licence with Delta Galil. In October 2018 we signed a new global watch licence with Timex Group, which will allow us to benefit from its expertise and long history as an authentic watchmaker. Both of these new partners reflect our commitment to working with the best product specialists that are able to support our status as a truly global lifestyle brand.

Brexit

We have developed a number of strategies and contingency plans which will assist in minimising disruption caused by Brexit. A number of indirect risks remain which are beyond our control and the resulting risk that they pose is highly reliant on the preparedness of national authorities and other businesses. The key risks are discussed in further detail in the principal risks and uncertainties section on page 18.

Financial Results

Group revenue for the period increased by 4.4% (5.0% in constant currency)1 to £617.4m (2018: £591.7m). The Group gross margin was lower at 58.3% (2018: 61.0%). We had anticipated a slightly lower retail margin, as the prior year had benefited from an improved full price sell through. The resultant margin was further reduced by an increase in promotional activity in response to the challenging trading conditions. This was partly offset by an increased wholesale margin, due to a greater proportion of sales being made to our wholesale partners, known as "Trustees of the brand", which carry a higher margin than sales to our retail licence partners and some foreign exchange benefits.

Profit before tax and exceptional items2 decreased by 14.3% to £63.0m (2018: £73.5m) and profit before tax decreased by 26.1% to £50.9m (2018: £68.8m). Adjusted basic earnings per share, which excludes exceptional items, decreased by 10.6% to 114.2p (2018: 127.7p) and basic earnings per share decreased by 23.1% to 91.5p (2018: 119.0p).

Exceptional items in the period amounted to £12.1m (2018: £4.7m) and comprised the impairment of retail assets in the UK, Europe, US and Asia, debtor balances owed by House of Fraser which are no longer expected to be recovered following its entry into Administration on 10 August 2018, costs in respect of the independent investigation referred to previously and costs in respect of the acquisition of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC.

The Group's net borrowing position at the end of the period was £123.8m (2018: £111.8m) being the secured term loan of £47.0m (2018: £52.5m) used to purchase The Ugly Brown Building and other net debt of £76.8m (2018: £59.3m). Net debt increased due to the cash consideration paid on acquisition in respect of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC of £20.3m, offset by benefits from our ongoing focus on working capital efficiencies.

Dividends

Reflecting the strength of the Group's underlying performance, the Board is recommending a final dividend of 40.7p per share (2018: 43.5p), making a total for the period of 58.6p per share (2018: 60.1p per share), a decrease of 2.5% on the prior period. Subject to approval by shareholders at the Annual General Meeting to be held on 12 June 2019, the final dividend will be paid on 22 June 2019 to shareholders on the register on 18 May 2019.

Current Trading and Outlook

Retail

In the UK and Europe, we plan to open our first full price stores in Antwerp, Belgium and Hamburg, Germany, and, an outlet in Metzingen, Germany, along with two further concessions in Germany. We will continue to invest in our e-commerce sites to enhance the customer experience and journey, with our localised Spanish website due to launch in late May.

In North America, we will continue to develop our presence with plans to open a store in Detroit and two further concession openings, along with two further licence partner concessions in Mexico.

In the Rest of the World, we continue to refine and define our strategy for success and we remain focused on building brand awareness. In line with our development strategy in this territory, we plan to open an outlet in Hong Kong.

Wholesale

We anticipate further growth across our wholesale businesses, which should result in low to mid-single digit sales growth (in constant currency) in the coming period.

Licence Income

Our product and territorial licences continue to perform well. We have opened our first licensed partner store in Malta, with plans to open further licensed stores during the year in Croatia, Egypt, Indonesia and Mexico.

Group

We have a very clear strategy for the continued expansion of Ted Baker as a global lifestyle brand across both established and newer markets. Our flexible business model ensures that our customers have multiple channels to engage with the brand. Our growing e-commerce business, underpinned by a relatively low number of own stores that showcase the brand, mean that we are well positioned to deal with the structural changes in an evolving retail environment and continue Ted Baker's long-term development.

Led by our acting Chief Executive Officer, Lindsay Page, we are confident that the strong and experienced team we have in place will continue to implement our strategy and develop Ted Baker as a global lifestyle brand.

To deliver our expansion plans, capital expenditure in the new financial period is planned to be £31.0m (2019: £30.3m). This relates to further store openings and refurbishments and a number of omni-channel initiatives as we start to benefit from our new IT systems. We continue to explore options for the development and expansion of the Ugly Brown Building to support our future growth plans.

Trading continues to be impacted by ongoing consumer uncertainty and an elevated level of promotional activity across many of our global markets as well as recent unseasonal weather in North America. Despite this, we remain confident in our collections for Spring / Summer and the Board remains focussed on identifying opportunities in the evolving retail market to progress the long-term development of the brand. We intend to make our trading statement covering trading from the start of the financial period in mid-June 2019.

David Bernstein CBE

Executive Chairman

21 March 2019

Notes:

1 Constant currency comparatives are obtained by applying the exchange rates that were applicable for the 52 weeks ended 27 January 2018 to the financial results in overseas subsidiaries for the 52 weeks ended 26 January 2019 to remove the impact of exchange rate fluctuations.

2 Profit before tax and exceptional items is a non-GAAP measure. For further information about this measure, and the reasons why we believe it is important for an understanding of the performance of the business, please refer to page 15 in the Financial Review and Note 1 and Note 3 of the Financial Statements.

The Directors believe these measures provide a consistent and comparable view of the underlying performance of the Group's ongoing business.

Business model and strategy

Ted Baker has grown steadily from its origins as a specialist shirt store in Glasgow to the global lifestyle brand it is today.

Ted Baker's Mission Statement

Our mission is to build a successful company through the creation of a leading designer brand. By conducting ourselves in an efficient and courteous manner and by maintaining Ted's high standards of integrity, we pride ourselves on always being in a position to satisfy the needs of our customer. In order to protect the ethos and persona for which we have gained an enviable reputation, we always ask ourselves the question: "Would Ted do it that way?"

Product

Ted Baker is a quintessentially British brand that travels well with a quirky yet commercial fashion offering that prides itself in always being able to satisfy the needs of our customer. Our approach is focused on unwavering attention to detail and firm commitment to quality.

We offer a wide range of collections including Menswear; Womenswear; Global; Phormal; Endurance; Colour By Numbers; Accessories; Bedding; Childrenswear; Eyewear; Footwear; Fragrance and Skinwear; Gifting and Stationery; Jewellery; Lingerie and Sleepwear; Luggage; Neckwear; Rugs; Suiting; Technical Accessories; Tiles; and Watches.

The menswear collection is a reflection of popular contemporary culture, with a sense of humour and style mixed in. It also includes our Phormalwear range, offering a number of distinctive suiting collections that combine heritage British tailoring with a modern outlook. The womenswear collection is a fresh and feminine mix of European elegance with London flair, and is a celebration of beauty, individuality and exquisite attention to detail.

Distribution Channels

The brand operates through three main distribution channels: retail (including e-commerce); wholesale; and licensing, which includes territorial and product licences. We want our customers to enjoy a seamless experience regardless of how they choose to shop and interact with the brand.

The retail channel comprises stores, concessions and e-commerce, which is now an integral part of our retail experience. We operate stores and concessions across the UK, Europe, North America, Africa and Asia, and localised e-commerce sites for the UK, France, Germany, US, Canada and Australia. We also have e-commerce businesses with some of our concession partners.

Stores and concessions are designed to showcase the brand's unique style of retail theatre and to ensure our customers enjoy a welcoming and pleasurable shopping experience. Each store boasts a fully bespoke design that is full of innovative and distinctive touches.

E-commerce enables us to offer our customers access to an extended product range and provides us with a means to talk directly with our customers and engage them with the brand. We focus on ensuring that we provide a user-friendly online brand and shopping experience across multiple devices.

The wholesale business in the UK serves countries across the world, primarily in the UK and Europe, as well as supplying products to stores operated by our territorial licence partners. In addition, we operate a wholesale business in North America serving the US and Canada. Our wholesale partners ("Trustees") are custodians of our collections and uphold our brand integrity by ensuring that their retail environment and brand adjacencies are in keeping with the profile and positioning of the brand. We have built up strong relationships with some of the best independent retailers, online retailers and department stores around the world.

We operate both territorial and product licences. Our licence partners are all experts in their field and share our passion for unwavering attention to detail and firm commitment to quality.

Territorial licences cover specific countries or regions in Asia, Australasia, Europe, the Middle East, Africa and Central America, where our partners operate licensed retail stores and, in some territories, wholesale operations.

Product licences cover Bedding; Childrenswear; Eyewear; Footwear; Fragrance and Skinwear; Gifting and Stationery; Jewellery; Lingerie and Sleepwear; Luggage; Neckwear; Rugs; Suiting; Technical Accessories; Tiles; and Watches. For much of the year, footwear was also operated under licence to Pentland. On 1 January 2019, the Group acquired its footwear licence and will use this exciting opportunity to drive further growth in its footwear business by leveraging the Group's global footprint and well invested infrastructure.

Geographic Reach

Ted Baker is a global lifestyle brand with 560 stores and concessions worldwide, comprised of 201 in the UK, 122 in Europe, 130 in North America, 98 in the Middle East, Africa and Asia, and 9 in Australasia.

The Group opened its first shop in the UK in Glasgow in 1988 and has since established itself in all the major fashion destinations in the UK. We have also built a growing presence in Europe with stores and concessions in Belgium, France, Germany, Ireland, Italy, the Netherlands, Portugal and Spain. Our e-commerce and wholesale businesses complement our locations in Europe.

In 1998, the Group opened its first store in North America in New York. Since then, the Group has established a presence across the US from the East to West Coasts and into Canada through both own stores and concessions. In addition, the Group has a standalone e-commerce site in North America that is localised to each of Canada and the US, and a growing wholesale business.

As part of our strategy to invest for the longer-term development of the brand, we have launched the brand in Asia with stores and concessions in China, Hong Kong and Japan. We also understand the growing desire of our customers to buy our products online and trade on renowned local websites in this region. We continue to refine and develop our strategy for success in Asia.

Through our territorial licences we also trade in many other countries across Africa, Asia, Australasia, Europe and the Middle East.

Strategy

Our strategy is to enhance our position as a leading global lifestyle brand by the continuous development of three main elements of our business model:

· Considered extension of the Ted Baker collections to achieve our brand growth potential. We review our collections continually to ensure we anticipate and react to trends and meet our customers' expectations. In addition, we look for opportunities to extend the breadth of our collections and enhance our offer;

· Controlled distribution through three main channels: retail (including concessions and e-commerce); wholesale; and licensing. We consider each new opportunity to ensure it is right for the brand and will deliver margin led growth; and

· Carefully managed development of existing and new international markets. We continue to manage growth in existing territories while considering new territories for expansion.

Underlying our strategy is an emphasis on design, product quality and attention to detail, delivered by the passion, commitment and dedication of our teams, licence partners and wholesale customers.

Key Performance Indicators

We review the ongoing performance of the business using key performance indicators.

The Key Performance Indicators ("KPI's") that the Directors judge to be most effective in assessing progress against the Group's objectives and strategy have been detailed below and are considered throughout the Strategic Report.

1 Constant currency comparatives are obtained by applying the exchange rates that were applicable for the 52 weeks ended 27 January 2018 to the financial results in overseas subsidiaries for the 52 weeks ended 26 January 2019 to remove the impact of exchange rate fluctuations.

 2 For information about exceptional items please refer to page 15 in the Financial Review and Note 1 and Note 3 of the Financial Statements.

3 Excludes licensed partner stores.

4 Working capital comprises inventories, trade and other receivables and trade and other payables.

Business Review

Distribution Channels

The brand operates through three main distribution channels: retail, which includes concessions and e-commerce; wholesale; and licensing, which includes territorial and product licences. As part of our strategy we look to further develop each of these routes to market, while ensuring the controlled distribution of our product.

Retail

Our retail channel comprises stores, concessions and e-commerce, providing an omni-channel experience. We operate stores and concessions across the UK, Europe, North America and the Rest of the World, and localised e-commerce sites in the UK, continental Europe, the US, Canada and Australia. We also have e-commerce businesses with some of our concession partners. Our unique stores showcase the Ted Baker brand and are key to the growth and success of our e-commerce business. Our relatively low number of own stores and higher number of concession locations allows us to maintain a flexible store business model.

Retail sales grew by 4.2% (4.8% in constant currency)1 to £461.0m (2018: £442.5m). Performance was impacted by competitive discounting across the retail sector, consumer uncertainty, the well-publicised challenges facing some of our UK trading partners and the unseasonable weather across our global markets at different points throughout the year. Despite this, growth was driven by continued investment across the retail channel in new and existing stores and our e-commerce platform.

The total growth in retail sales of 4.2% (4.8% in constant currency)1 compares to an increase in average retail square footage of 5.2% to 431,646 sq ft (2018: 410,190 sq ft). Retail sales per square foot (excluding e-commerce) decreased 5.5% (decrease of 4.9% in constant currency)1 to £786 (2018: £832) demonstrating the challenging external trading conditions together with changing customer behaviour with customers shopping both online and in store.

The retail gross margin decreased to 63.1% (2018: 67.0%) as the prior year had benefited from an improved full price sell through and was further reduced by an increase in promotional activity in response to the very difficult trading conditions.

Retail operating costs increased by 3.0% (3.6% in constant currency)1 to £231.9m (2018: £225.2m) and as a percentage of retail sales, decreased to 50.3% (2018: 50.9%).

Wholesale

Our wholesale business in the UK serves countries across the world, primarily in the UK and Europe, as well as supplying products to stores operated by our territorial licence partners. In addition, we operate a wholesale business in North America serving the US and Canada.

Group wholesale sales increased by 4.8% (5.7% in constant currency)1 to £156.5m (2018: £149.2m), reflecting further growth in both our UK and Europe wholesale business, with sales increasing by 6.0% (6.0% in constant currency) to £99.7m (2018: £94.1m), and our North American wholesale business, with sales increasing by 3.1% (5.4% in constant currency)1 to £56.8m (2018: £55.1m).

The wholesale gross margin increased to 44.1% (2018: 43.3%) due to a greater proportion of sales to our wholesale partners, known as "Trustees of the brand", which carry a higher margin than sales to our retail licence partners and some foreign exchange benefits.

Collections

Ted Baker Womenswear sales were up 11.8% to £382.2m (2018: £342.0m) and represented 61.9% (2018: 57.8%) of total sales. Ted Baker Menswear sales were down 5.8% to £235.2m (2018: £249.7m) and represented 38.1% of total sales (2018: 42.2%). The increase in womenswear sales was in part due to the increased proportion of e-commerce sales, which accounts for a higher proportion of womenswear sales than menswear, and the difficult market conditions which had a disproportionate impact on menswear sales.

Licence Income

We operate both territorial and product licences. Our licence partners are carefully selected as experts in their field and share our passion for unwavering attention to detail and firm commitment to quality.

On 1 January 2019, we acquired the issued share capital of No Ordinary Shoes Limited and No Ordinary Shoes USA LLC from Pentland. Pentland previously held the exclusive global licence to manufacture and distribute footwear under the Ted Baker brand and therefore the licence income earned ceased from the acquisition date.

Licence income grew by 3.1% to £22.1m (2018: £21.4m). Underlying growth in licence income was 5.5%, adjusting for the acquisition of the footwear licence. We saw a stronger performance from our product licences during the period despite a number being impacted by the external trading conditions in the UK.

During the period, we signed two new global licence agreements which will commence in the year ending 25 January 2020. We signed a new men's underwear and loungewear global licence with Delta Galil. We also signed a new global watch licence with Timex Group, allowing us to benefit from their expertise and long history as an authentic watchmaker. Both new partners reflect our commitment to working with the best product specialists that are able to support our status as a truly global lifestyle brand.

Geographic Performance

United Kingdom and Europe

* Excludes licensed partner stores

Retail sales in UK and Europe increased by 4.6% (4.5% in constant currency)1 to £315.0m (2018: £301.1m) despite the widely reported ongoing difficult trading conditions, unseasonable weather at different points throughout the period and the impact on our concession business with House of Fraser in the lead up to its administration in August 2018.

E-commerce sales increased by 18.8% to £98.0m (2018: £82.5m) demonstrating that e-commerce sales are an integral part of the retail proposition in the UK and European markets. As a percentage of UK and Europe retail sales, e-commerce sales represented 31.1% (2018: 27.4%).

Sales per square foot excluding e-commerce sales decreased reflecting changing customer behaviour as customers move to online. However our stores remain key to the success of the e-commerce business through initiatives such as order in store and click and collect as well as showcasing the brand and the collections and contribute a healthy financial return.

During the year, our expansion continued across the UK and Europe. We increased our travel footprint with store openings in Luton Airport, London Bridge and our first international airport location in Barcelona, Spain. We also opened our first outlet in London at the O2, and our first outlet in Italy and opened further outlets in Germany and France. We opened further concessions with premium department stores in the UK, France, Germany and Spain. We also opened our first licence partner stores in the Canary Islands, Kosovo and Ukraine. We are pleased with the performance of the new openings and remain positive about further growth opportunities for our brand across these markets. Given the ongoing challenging trading conditions, the Group has impaired three stores in the UK and two stores in Europe in the period.

Sales from our UK wholesale business, which include our wholesale export business and the supply of product to our retail licence partners, increased by 6.0% to £99.7m (2018: £94.1m) reflecting a good performance from sales to trustees, particularly within our growing European export business and those trustees with a strong online proposition.

North America

* Excludes licensed partner stores

We are confident that the Ted Baker brand is becoming more established and continues to gain recognition in this territory as reflected in the significant growth in e-commerce revenue.

Sales from our retail division in North America increased by 4.7% (7.0% in constant currency)1 to £125.7m (2018: £120.1m) driven by our continued expansion in this region and sales per square foot excluding e-commerce sales decreased in constant currency1. Performance was impacted by unseasonable weather at different points throughout the period.

In the period, we opened new stores in Austin, Chicago, Orlando, San Diego and San Francisco and our first stores in Mexico with our licence partner. We closed four of our existing concessions and impaired four stores in light of the broader trading conditions.

Our e-commerce business delivered a strong performance with sales increasing by 26.4% (28.5% in constant currency)1 to £20.6m (2018: £16.3m). As a percentage of North America retail sales, e-commerce sales represented 16.4% (2018: 13.6%).

Sales from our North American wholesale business increased by 3.1% (5.4% in constant currency)1 to £56.8m (2018: £55.1m) reflecting a strengthening relationship with key trustees that attract domestic customers across North America, further demonstrating increased brand recognition in this territory. Sales in the second half of the year were impacted by trustees taking a more cautious stance as well as the timing of deliveries around year end.

Rest of the World

*Excludes licensed partner stores

We continue to develop the Ted Baker brand across the Middle East, Asia, Africa and Australasia through our retail and licensing channels.

Retail sales in Rest of the World decreased 4.7% (2.9% in constant currency)1 to £20.3m (2018: £21.3m). This decrease is partly due to the prior year transition of our retail operations in South Korea to a distributor who has the knowledge and experience to drive growth locally as well as a further refinement of our store portfolio in this territory. In China, we opened a store in Shanghai and closed one store, one outlet and three concessions within China, as well as the closure of one store in Hong Kong. We also impaired four stores that have failed to deliver on their potential. We continue to refine and develop our strategy for success in Asia.

During the year, we opened our first licence partner stores in India and our Asian licence partners also opened stores across the region including Indonesia, Malaysia, Singapore, Taiwan and Thailand. Our Middle Eastern licence partners opened stores across Saudi Arabia and a store in Kazakhstan and United Arab Emirates. As at 26 January 2019, our licence partners operated 75 stores and concessions across the Middle East, Asia and Africa (2018: 60).

The joint venture with our Australasian licence partner, Flair Industries Pty Ltd, continued to perform well. As at 26 January 2019, we operated 9 stores in Australasia (2018: 9 stores).

Notes:

1 Constant currency comparatives are obtained by applying the exchange rates that were applicable for the 52 weeks ended 27 January 2018 to the financial results in overseas subsidiaries for the 52 weeks ended 26 January 2019 to remove the impact of exchange rate fluctuations.

The Directors believe this measure provides a consistent and comparable view of the underlying performance of the Group's ongoing business.

Financial Review

Revenue and Gross Margin

Group revenue increased by 4.4% (5.0% in constant currency)1 to £617.4m (2018: £591.7m), driven by a 4.2% (4.8% in constant currency)1 increase in retail sales to £461.0m (2018: £442.5m) and a 4.8% (5.7% in constant currency)1 increase in wholesale sales to £156.5m (2018: £149.2m).

The Group gross margin was lower at 58.3% (2018: 61.0%). We had anticipated a slightly lower retail margin, as the prior year had benefited from an improved full price sell through. The resultant margin was further reduced by an increase in promotional activity in response to the difficult trading conditions. This was partly offset by an increased wholesale margin, due to a greater proportion of sales being made to our wholesale partners, known as "Trustees of the brand", which carry a higher margin than sales to our retail licence partners and some foreign exchange benefits.

Operating Expenses Before Exceptional Items2

Distribution costs, which comprise the cost of retail operations and distribution centres increased by 5.6% to £249.8m (2018: £236.5m). Distribution costs excluding exceptional costs2 increased by 3.7% (4.1% in constant currency)1 to £240.5m (2018: £232.0m) and as a percentage of sales decreased to 38.9% (2018: 39.2%).

Administrative costs increased by 5.5% to £79.8m (2018: £75.6m). Administration expenses excluding exceptional costs2 increased by 1.9% (2.4% in constant currency)1 to £76.9m (2018: £75.5m). This increase is due to modest growth in our central functions, both in the UK and overseas and investment in customer engagement. The increase has been partially offset by a measured and controlled approach to multiple cost saving initiatives across the central functions of the business which have started to deliver savings as well as efficiency benefits from the investment in infrastructure.

Dual running costs incurred in respect of our new North American distribution centre and the systems roll-out were £2.8m (2018: £2.1m) in the period. No further dual running costs are expected to arise in the next financial year.

Profit Before Tax and Exceptional Items3 and Profit Before Tax

Profit before tax and exceptional items3 was £63.0m (2018: £73.5m) and profit before tax was £50.9m (2018: £68.8m).

Exceptional Items2

Exceptional items in the period amounted to £12.1m (2018: £4.7m) and comprised provision for debtor balances owed by House of Fraser on its entry into administration of £0.6m, advisory and one-off integration costs in relation to the acquisition of the footwear business of £1.7m, costs incurred prior to the year end in relation to the ongoing investigation into the allegations of misconduct of the former Chief Executive Officer and the Group's policies, procedures and handling of HR-related complaints of £1.1m and the impairment of retail assets across the Group of £8.7m.

Exceptional items in the 52 weeks ended 27 January 2018 of £4.7m included the impairment of retail assets, relating to three stores in the US and one store in Europe of £4.5m, and restructuring costs of £1.3m, partially offset by income of £1.1m related to the release of provisions against the Group's legacy warehouses following assignment of the leases.

For further information about this measure, and the reasons why we believe it is important for an understanding of the performance of the business, please refer to Note 1 of the Financial Statements.

Finance Income and Expenses

Net interest payable during the period was £3.6m (2018: £3.2m). The increase was largely due to higher average borrowings on the revolving credit facility as well as an increase in LIBOR rates in the year.

The net foreign exchange loss during the period of £0.5m (2018: gain £0.7m) was due to the translation of monetary assets and liabilities denominated in foreign currencies. The decrease from the prior period was due to the appreciation of Sterling at the end of the year compared to the prior year.Taxation

The Group tax charge for the year was £10.1m (2018: £16.0m), an effective tax rate of 19.9% (2018: 23.3%). This effective tax rate is higher than the UK tax rate for the period of 19% largely due to higher overseas tax rates and the non-recognition of losses in overseas territories. During the second half, there has been a release of prior year tax provisions which has reduced the effective tax rate. The UK corporation tax rate reduced to 19% from 1 April 2017 and will reduce to 17% from 1 April 2020. The US federal corporate income tax rate has reduced to 21% with effect from 1 January 2018.

Our closing UK deferred tax assets and liabilities have been largely measured at 17% based on the corporation tax rate at which they are anticipated to unwind. Overseas deferred tax assets and liabilities have been measured at the applicable overseas tax rates.

Our future effective tax rate is expected to be higher than the UK tax rate as a result of overseas profits arising in jurisdictions with higher tax rates than the UK. We would expect future reductions in the effective tax rate given the UK rate reduction to 17% from 1 April 2020.

Shareholder Return

Basic earnings per share decreased by 23.1% to 91.5p (2018: 119.0p). Adjusted earnings per share, which exclude exceptional items4, decreased by 10.6% to 114.2p (2018: 127.7p).

The proposed final dividend of 40.7p per share will make a total for the period of 58.6p per share (2018: 60.1p per share), a decrease of 2.5% on the previous period.

Cash Flow

The decrease in net cash and cash equivalents of £17.8m (2018: £21.9m) primarily reflected the acquisition of the footwear business, an increase in working capital and further capital expenditure to support our long-term development.

On 1 January 2019, the Group acquired its footwear business from its previous licence partner. The consideration paid was £20.3m (see Note 10).

Total working capital, which comprises inventories, trade and other receivables and trade and other payables, increased by £27.2m to £195.8m (2018: £168.6m).

This was mainly driven by an increase in inventories of £38.6m to £225.8m (2018: £187.2m) reflecting the acquisition of the footwear business, some earlier phasing of stock deliveries and the impact of the movement in foreign exchange rates.

Trade and other receivables increased by £14.3m to £78.6m (2018: £64.3m). This was driven by a number of factors including the acquisition of the footwear business which is principally a wholesale operation, the timing of payments around year end and the impact of the movement in foreign exchange rates.

Trade and other payables increased by £25.7m to £108.6m (2018: £82.9m) reflecting the acquisition of the footwear business, the impact of the movement in foreign exchange rates and the early benefits of working capital initiatives.

Group capital expenditure of £30.3m (2018: £36.6m) relates to the opening and refurbishment of stores, concessions and outlets and the ongoing investment in business-wide IT systems and infrastructure to support our continued growth.

Borrowing Facilities

The Group's net borrowing position at the end of the period was £123.8m (2018: £111.8m).

The Group manages its liquidity using a multi-currency revolving credit facility of £135.0m, expiring in September 2020. The facility provides the resources to fund the planned investment in capital expenditure and working capital required to support the Group's long-term growth strategy. The facility contains covenants against which the Group monitors actual and prospective compliance. As at the period end, the Group had drawn £91.3m (2018: £72.9m) under this facility.

In addition, the Group has a term loan that was used to support the purchase of The Ugly Brown Building and is secured upon the freehold property interest in that building. The loan was originally £60.0m and is being amortised over 15 years with refinancing required every five years from 2015. During the period, repayments totalling £5.5m (2018: £6.0m) were made.

Treasury Risk Management

The most significant exposure to foreign exchange fluctuation relates to purchases made in foreign currencies, principally the US Dollar and the Euro.

A proportion of the Group's purchases are hedged in accordance with the Group's risk management policy, which allows for foreign currency to be hedged for up to 24 months in advance. The balance of purchases is hedged naturally as the business operates internationally and income is generated in the local currencies. At the balance sheet date, the Group has hedged a proportion of its projected commitments in respect of the period ending 25 January 2020 as well as a proportion of its requirements for the following period.

The Group is also exposed to movements in foreign exchange rates on intercompany balances denominated in a foreign currency. These are not hedged.

The Group is exposed to movements in UK interest rates as both the revolving credit facility and term loan accrue interest based on LIBOR plus a fixed margin. The Group has partially mitigated this risk by entering into interest rate swap agreements, fixing £30.0m of the floating rate net debt.

Notes:

1 Constant currency variances are calculated by applying the exchange rates for the 52 weeks ended 27 January 2018 to results financial results in overseas subsidiaries for the 52 weeks ended 26 January 2019 to remove the impact of exchange rate fluctuations.

2 For information about exceptional items please refer to Note 1 and Note 3 of the Financial Statements.

3 Profit before tax and exceptional items is a non-GAAP measure, adjusted for exceptional items.

4 Adjusted earnings per share is a non-GAAP measure, adjusted for exceptional items.

Principal Risks and Uncertainties

The Board is ultimately responsible for the Group's system of risk management and internal control and for reviewing its effectiveness, and for determining the Group's risk appetite. The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the period and up to the date of approval of these financial statements, and that this process is regularly reviewed by the Board. However, such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

Risk Management Process

In order to help manage the Group's risks and uncertainties, the Board has delegated responsibility for monitoring the effectiveness of the Group's systems of internal control and risk management to the Audit Committee.

In addition, the Group has established a Risk Committee that includes the Finance Director and various members of the Executive Board and heads of department. The Risk Committee helps the Executive Board review the risk management and control process in each key business area on an ongoing basis, and provides a platform for management to drive improvement across the business. The Risk Committee considers:

• the authority, resources and co-ordination of those involved in the identification, assessment and management of significant risks faced by the Group;

• the response to the significant risks which have been identified by management and others;

• the maintenance of a controlled environment directed towards the proper management of risk; and

• the annual reporting procedures.

Having considered the key risks inherent in the business and the system of control necessary to manage such risks, the Finance Director presents the Risk Committee's findings to the Board on a regular basis. In addition, the Chief Executive Officer reports to the Board on changes in the business and the external environment which affect significant risks.

In turn, the Audit Committee assesses the findings and recommendations of the Risk Committee and the Group's external and internal audit processes and looks critically at how the business responds, as well as investigating material issues and what actions they implement to prevent future issues.

On behalf of the Board, the Audit Committee has reviewed the effectiveness of the system of risk management and internal control during the period, covering all material controls, including financial, operational and compliance controls. In particular, it has reviewed and updated the process for identifying and evaluating the significant risks affecting the business and the policies and procedures by which these risks are managed. Management is responsible for the identification and evaluation of significant risks applicable to their areas of the business together with the design and operation of suitable internal controls. These risks are assessed on a continual basis and may be associated with a variety of internal or external sources including control breakdowns, disruption in information systems, competition, natural catastrophes and regulatory requirements, and also with reference to the Group's five year strategic and financial plan. During the period, the Board has continued to place significant focus on risk management. Following the Audit Committee's engagement of PricewaterhouseCoopers LLP ("PwC") to undertake a detailed review of the Group's risk framework and internal audit function in the prior period, the Board has again retained PwC to assist the Risk Committee and Audit Committee in managing the Group's risk profile and increasing engagement with stakeholders in the Group.

The Group has an independent internal audit function whose findings are regularly reviewed by the Board and the Executive Committee. The Audit Committee monitors and reviews the effectiveness of the internal audit activities.

The acting Chief Executive Officer provides the Board with monthly financial information which includes updates by reference to the Group's key performance indicators.

The Board has carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. The following list highlights the principal risks identified by the Group (which are not shown in order of importance). Additional risks and uncertainties not presently known, or currently considered to be less material, may also have an adverse effect on the Group.

Brexit

At the time of publication, the United Kingdom is due to leave the European Union on 29 March 2019. The basis on which the United Kingdom's withdrawal will take place is unclear. Undoubtedly, a so-called "no deal" withdrawal (under which there is no free trade agreement) is likely to have the greatest impact on the Group. In preparation for a no deal withdrawal, the Group appointed a Brexit working group to work with external advisors to ascertain the likely impacts of such withdrawal on the business. This review included a consideration of our strategy, regulatory compliance, trade and team members.

We have developed a number of strategies and contingency plans which will assist in minimising any disruption caused by Brexit. Of course, there remain indirect risks which are beyond our control and the resulting risk that they pose is highly reliant on the preparedness of the national authorities and other businesses. The key risks are included in the analysis below.

Viability Statement

In accordance with Provision C.2.2 of the UK Corporate Governance Code dated April 2016 (the "Code"), the Directors have assessed the prospects and viability of the Group over a five year period, taking into account the Group's current position and the potential impact of the principal risks documented above.

Regardless of the outcome of the Brexit negotiations, the Group's objective remains the same; to continue to grow and develop the Ted Baker brand.

The Group operates a five year plan, which is updated and reviewed regularly by the Board. Within the five year plan, detailed scenario planning and stress testing has been carried out over a five year period. The Directors therefore consider the five year period to 27 January 2024 to be the appropriate period to assess the viability and prospects of the Group with a high level of certainty. The key assumptions made in the formulation of the five year plan are the increased exposure and promotion of the Ted Baker brand, geographical diversification of sales and turnover projections.

The Directors' assessment has been further enhanced by analysing the current and future risks, controls and assurances available, resulting in a clear picture of the risk profile across the whole business. The principal risks, including specific operational risks, that could affect the future viability of the Group over the next five years are identified in the Principal Risks and Uncertainties section of this statement.

In making this assessment the Directors have considered the resilience of the Group to the occurrence of these risks in severe but plausible scenarios, including by reference to certain principal risks, and taking into account the effectiveness of any mitigating actions. In addition, the Board has considered the impact on the Group's cash flows, headroom, covenants and other key financial ratios having stress tested the potential impact of these scenarios, both individually and in combination.

Sensitivity analysis was also used to stress test the Group's strategic plan and to confirm that sufficient headroom would remain available under the Group's credit facilities. The resilience of the Group has also been tested within the context of the potential adverse impacts of Brexit. For this purpose, the Group has worked on the assumption that there will be no negotiated free trade agreement, no roll over of preferential trade deals with third countries and no reduction to trade tariffs implemented by HM Government.

Analysis was undertaken to interrogate the impact of Brexit as set out above as well as a scenario where there is an independent decline in consumer demand. The Board is satisfied that the Group can maintain its profitability in each respective scenario as well as a combination of the scenarios. The Board also considers that under each scenario tested, the mitigating actions would be effective and sufficient to ensure the continued viability of the Group and there would be no impact on any covenants. For the reasons stated above, based on the robust assessment undertaken, the Directors confirm they have a reasonable expectation that the Group will be able to continue in operation, and meet its liabilities as they fall due, over the period of assessment.

Going Concern

The Directors have reviewed the Group's budgets and long-term projections. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for twelve months from the approval of these accounts. For this reason, they continue to adopt the going concern basis of accounting in preparing the financial statements.

Group Statement of Changes in Equity

For the 52 weeks ended 26 January 2019

Group Statement of Changes in Equity

For the 52 weeks ended 27 January 2018

Company Statement of Changes in Equity

For the 52 weeks ended 26 January 2019

Company Statement of Changes in Equity

For the 52 weeks ended 27 January 2018

Group and Company Balance Sheet

At 26 January 2019

These financial statements were approved by the Board of Directors on 21 March 2019 and were signed on its behalf by:

Lindsay Page

Director

Company number: 03393836Group and Company Cash Flow Statement

For the 52 weeks ended 26 January 2019

Notes to the Financial Statements

For the 52 weeks ended 26 January 2019

1. Summary of Significant Accounting Policies

Basis of preparation

EU law (IAS Regulation EC 1606/2002) requires that the Group financial statements, for the 52 weeks ended 26 January 2019 are prepared in accordance with International Financial Reporting Standards (IFRSs) adopted for use in the EU ("adopted IFRSs").

The financial information set out above does not constitute the company's statutory accounts for the 52 weeks ended 26 January 2019 or 27 January 2018 but is derived from those accounts. Statutory accounts for 2018 have been delivered to the Registrar of Companies, and those for 2019 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Statutory accounts for 27 January 2018 have been delivered to the Registrar of Companies. The auditor has reported on those accounts; their reports were i) unqualified and, ii) did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out on pages 3 to 17. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Chairman's Statement on pages 3 to 6. In addition, the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

The Group meets its day-to-day working capital requirements through a committed overdraft facility expiring in September 2020 which is a multi-currency Revolving Credit Facility with The Royal Bank of Scotland, Barclays and HSBC. The facility will be used to the extent necessary to fund working capital and capital expenditure to support the Group's growth strategy.

The Group's forecasts and projections, taking into account reasonably possible changes in trading performance, show that the Group has sufficient financial resources. As a consequence, the Directors have a reasonable expectation that the Company and the Group are well placed to manage their business risks and to continue in operational existence for the twelve months from the date of signing the financial statements, despite the current uncertain global economic outlook. Accordingly, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

Non-GAAP performance measures

Exceptional items are added back/deducted to derive certain non-GAAP measures as follows:

· profit attributable to the owners of the Company, to arrive at adjusted earnings per share (after the tax effect of exceptional items); and

· profit before tax, to arrive at profit before tax and exceptional items.

Exceptional items are those items which, in the opinion of the Directors, should be excluded in order to provide a consistent and comparable view of the underlying performance of the Group's ongoing business. Generally, exceptional items include those items that do not occur often and are material.

We believe the non-GAAP performance measures presented along with comparable GAAP measurements is useful to provide information with which to measure our performance, and our ability to invest in new opportunities. Management uses these measures with the most directly comparable GAAP financial measures in evaluating our operating performance and value creation. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. The requirements for identifying exceptional items are on a consistent basis each period and presented consistently, and a reconciliation of profit before tax and exceptional items to profit before tax is included in Note 3 to the financial statements.

Exceptional items in the period included:

· provision for debtor balances owed by House of Fraser which are not expected to be recovered following its entry into administration. The Directors judge this to be exceptional as the Group does not frequently experience bad debts of this quantum;

· costs incurred directly in relation to business combinations including advisory costs and one-off integration costs. The Directors judge this to be exceptional due to the infrequent occurrence of such business combinations;

· costs incurred in relation to the investigation into the allegations of misconduct of the former Chief Executive Officer and the Group's policies, procedures and handling of HR-related complaints. The Directors judge this to be exceptional due to the quantum and nature of the costs; and

· the impairment of assets in retail stores in various territories across the Group. The Directors judge this to be exceptional as the Group does not frequently impair assets of this quantum.

Exceptional items in the prior period included:

· the impairment of assets in retail stores in various territories across the Group. The Directors judge this to be exceptional as the Group does not frequently impair assets of this quantum;

· restructuring costs incurred in aligning internal structures to the Group's strategic aims. The Directors judge this to be exceptional due to the infrequent occurrence of such costs; and

· the release of the provision for the Group's legacy warehouses following assignment of the leases. The Directors judge this to be exceptional as the initial recognition of the cost of provision was treated as exceptional.

The Directors judge that the profit before tax and exceptional items and adjusted earnings per share measures provide useful information for shareholders on the underlying performance of the business. These measures are also consistent with how underlying business performance is measured internally.

The profit before tax and exceptional items and adjusted earnings per share are not recognised measures under IFRS and may not be directly comparable with adjusted profit and earnings per share measures used by other companies.

Constant currency comparatives are obtained by applying the exchange rates that were applicable for the 52 weeks ended 27 January 2018 to the financial results in overseas subsidiaries for the 52 weeks ended 26 January 2019 to remove the impact of exchange rate fluctuations.

Significant Accounting Policies

No new standards, amendments or interpretations, effective for the first time for the period beginning on or after 27 January 2018 have had a material impact on the Group or Company.

IFRS 9 'Financial Instruments', on 'Classification and Measurement' (effective 28 January 2018) addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. This has not had a material impact on the Group or Company.

IFRS 15 'Revenue from Contracts with Customers' (effective 28 January 2018) deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. This has not had a material impact on the Group or Company. As explained in e) below, retail revenue is recognised when a Group entity sells a product to a customer. Wholesale revenue is recognised when title has passed in accordance with the individual terms of trade. Licence income receivable from licensees is accrued as earned on the basis of the terms of the relevant licence agreement, which is typically on the basis of a minimum payment spread over the licence period and a variable amount based on turnover. Accrued income is from licence income earned but not billed in the period. This new standard has not had a material impact on the Group or Company.

At the balance sheet date there are a number of new standards and amendments to existing standards in issue but not yet effective. None of these is expected to have a significant effect on the financial statements of the Group or Company, except the following, set out below:

IFRS 16, Leases, addresses the definition of a lease, recognition and measurement of leases and establishes principles for reporting useful information to users of financial statements about the leasing activities of both lessees and lessors. A key change arising from IFRS 16 is that most operating leases will be accounted for on balance sheet for lessees. The standard replaces IAS 17, Leases, and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2019 and therefore will be adopted by the Group in the year ending 25 January 2020. See Note 12 for further information on the future impact of the adoption of this standard.

2. Segment Information

The Group has three reportable segments: retail, wholesale and licensing. For each of the three segments, the Executive Committee reviews internal management reports on a four weekly basis.

The accounting policies of the reportable segments are the same as described in the Group's financial statements. Information regarding the results of each reportable segment is included below. Performance for the retail segment is measured based on operating contribution, whereas performance of the wholesale segment is measured based on gross profit and performance of the licensing segment is measured based on royalty income, as included in the internal management reports that are reviewed by the Board.

Segment results before exceptional items are used to measure performance as management believes that such information is the most relevant in evaluating the performance of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on an arm's length basis.

a) Segment revenue and segment result

Wholesale sales are shown after the elimination of inter-company sales of £86,331,786 (2018: £113,081,488).