Ted Baker’s collapse is a lesson in the dangers of too much growth | Value Investing News

Ted Baker’s collapse is a lesson in the dangers of too much growth

  • The company had rapidly increased its debts to the point where they were somewhat excessive, and it had weak returns once leased capital was taken into account.
  • What does this have to do with Ted Baker?
  • Ted had returns on capital employed of 8%, paid about half of that out as a dividend, and yet managed to grow its capital employed (and revenues, earnings and dividends) by about 18%, year after year.
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