Ted Baker's (TED) shares crashed after the clothing brand announced the departures of its chief executive and executive chairman. The group, which also issued a profit warning, has lurched from crisis to crisis over the past 12 months, and is currently mired in an accounting debacle after announcing earlier this month that it has overstated the value of its inventory levels over prior years.
Lindsay Page, who replaced founder Ray Kelvin in April as chief executive, has been succeeded by chief financial officer Rachel Osborne as acting chief executive. Ms Osborne was only appointed to her CFO role last month.
Chairman David Bernstein steps away from his position immediately. His planned departure was announced in March alongside the exit of Mr Kelvin, who resigned over accusations of inappropriate behaviour towards staff, which he has denied. Mr Bernstein leaves the company well ahead of the announced deadline for his exit of 30 November 2020.
Ted Baker has scrapped its dividend in a damning profit warning that sent its shares down by more than a tenth to add to months of pressure on the stock price, which has raised speculation of a takeover. Ted Baker's shares are down by nearly two-thirds since the start of October.
Weaker-than-expected performance over November and Black Friday have driven down full-year expectations for pre-tax profits to just £5m, “with a potential outcome of up to £10m dependent on Christmas trading and final year-end review”, according to management. In the 17 weeks to 7 December, group turnover fell on an organic basis by 3.1 per cent.
Ted Baker has been unable to halt margin pressure from its first half, with margins forced down by increased promotional activity and “a more proactive approach to stock management and inventory sell through”. At the start of December, Ted Baker said that in unspecified prior years it had overstated the value of its inventories by around £20m-£25m.
“The current management uncertainty and weak operating performance leaves the business at risk of takeover,” Peel Hunt analysts wrote, “especially given founder Ray Kelvin’s c35 per cent stake.”
Peel Hunt cut its 2020 forecasts for adjusted pre-tax profits from £20.3m to £6.6m, while earnings per share expectations have been reduced from 34.1p to 11.1p.
