An American private equity firm is weighing a potential takeover bid for Ted Baker, the British fashion chain.

Sky News has learnt that Sycamore Partners is working with advisers to examine a potential offer for the London-listed company.

Ted Baker, which has a market capitalisation of approximately £170m, saw its shares surge by 8% towards the close of trading on Thursday.

One source said that Sycamore was considering making a formal approach to the board of Ted Baker, although it is understood that it has yet to do so.

Sycamore specialises in investments in the retail sector, having previously owned brands such as the upmarket footwear label Kurt Geiger.

This week, it was linked with a $9bn takeover bid for Kohl’s, the US department store chain.

It was also reported to be among the suitors circling Boots, Britain’s biggest chain of high street chemists, although City insiders have expressed scepticism about Sycamore’s eventual involvement in the auction.

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Sycamore is said to have hired Numis, the investment bank, to advise it on its interest in Ted Baker.

A source said it was possible that Sycamore would decide not to make a formal approach to Ted Baker, or that public disclosure of its interest could prompt it to walk away.

The fashion chain’s shares have fallen a further 20% during the last year, and it is unclear what might be regarded by shareholders as an acceptable takeover premium if a formal approach is made.

Despite its modest market capitalisation, Ted Baker occupies a prominent place in UK fashion retailing.

It trades from hundreds of standalone shops and concessions globally, and employs thousands of people.

The company was left without a permanent chairman following the death of John Barton, the respected City figure, late last year.

Ted Baker has endured a torrid period in recent years, especially in 2019 when founder Ray Kelvin left amid claims of inappropriate behaviour towards female colleagues.

Since then it has been hit by profit warnings, accounting mishaps and was forced to address the COVID-19 pandemic from a position of relative financial weakness.

In 2020, it axed hundreds of jobs and raised £100m to shore up its balance sheet.

Like other fashion retailers, it is now wrestling with the challenges posed by soaring inflation, higher energy costs and waning consumer confidence.

Nevertheless, the business has begun to show signs of a recovery, with a recent trading update disclosing that sales rose by 35% during the 12 weeks to January 29 compared with the same period a year earlier.

Rachel Osborne, its chief executive, said last month: “Ted is emerging from COVID a stronger more sustainable business and we’re excited for the future.”

A Ted Baker spokesman declined to comment on Thursday while Sycamore’s external public relations adviser did not respond to emails or telephone enquiries.

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