The CEO and executive chairman of UK fashion retailer Ted Baker have quit in the wake of falling sales and a controversy over the valuation of inventory.
The company yesterday reduced its profit forecast for the current year to a minimum pre-tax profit of £5 million, 90 percent less than the £50.9 million it achieved in the year to March.
That prompted a 15-per-cent drop in its already decimated share price. The company blamed a lack of consumer demand for its products, despite heavy discounting.
The fashion company’s woes began a year ago when its founder Ray Kelvin was forced to resign after denying allegations he harassed staff and forced them to hug him, prompting an 80-per-cent plunge in the company’s share price.
CEO Lindsay Page, a 21-year veteran at Ted Baker assumed leadership after Kelvin’s departure, lasting just nine months at the helm before yesterday’s resignation. Chairman David Bernstein followed suit.
Last month, Ted Baker appointed external consultants to assess its inventory value after an apparent overstatement of stock in the company’s books in the range of £20 to £25 million.
Some commentators in the UK say the company may be forced to take Kelvin back to restore the company’s fortunes. He still owns 35 percent of the business.
Emily Salter, retail analyst at GlobalData, said the departure of the key executives and the profit warning “demonstrate the severity of its poor trading performance and how the retailer is grappling to remain popular”.
“After an already turbulent year for its leadership team, the acting CEO and acting chair of the board must ensure that stability is maintained in the crucial Christmas trading period, as well as dealing with the impact of the overstatement of stock,” she said.
“Trading over November and Black Friday was below expectations with lower-than-anticipated margins as consumers were still not persuaded to purchase despite the brand offering a blanket 30 percent off all items. Ted Baker must address its waning popularity, by attracting back its loyal shoppers and innovating instore and online to make the shopping experience more exciting.”
Salter said while Ted Baker had previously been able to rely upon its online channel to drive group revenue growth with a robust multichannel proposition, its online sales fell by 0.7 percent.
“Although its digital channels still outperformed retail revenue, declining sales while the online clothing-and-footwear market continues to grow proves just how strong the effects of weakened consumer confidence and demand for the brand have been, as well as the fallout from negative press coverage surrounding Ray Kelvin.
“It will be a long road to recovery for Ted Baker, and it must focus on reviving previous demand for the brand and reducing its reliance on discounting to boost sales,” Salter concluded.’