In its third profit warning of 2019, Ted Baker predicted that its full-year pretax profit would fall from last year’s £50.9m ($67m, €60.5m) to just £5m “with a potential outcome of up to £10m dependent on Christmas trading and final year-end review”.
Having already lost three-quarters of its value this year the retailer scrapped its dividend and announced the immediate departure of Lindsay Page, its chief executive, and David Bernstein, its executive chairman.
Shares in the company plunged as much as 36 per cent on December 10 and recovered only slightly at 349.20 pence per share by early-afternoon trading, a drop of 12.61 per cent.
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The news is only the latest in a series of crises to hit Ted Baker in the past 12 months. In April its founder and CEO Ray Kelvin stepped down following allegations of sexual harassment, in particular a policy of “forced hugging”. In October it reported a £23m first-half loss, its first such loss in more than two decades. In early December it appointed accountants and lawyers to conduct a review following a £25m balance sheet error.
In a statement the retailer admitted: “The past 12 months have undoubtedly been the most challenging in our history.”
As well as issues in management and accounting, Ted Baker is struggling to compete on the high street. Between August 11 and December 11 its retail sales fell 5.5 per cent, with overall revenue down 3.9 per cent. A hoped-for Black Friday bump did not materialise. The company has attributed its woes to stiff competition from other retailers heavily discounting their goods.
Ted Baker said it anticipates “difficult trading conditions will continue, and therefore it is appropriate to take a more cautious outlook for the remainder of the financial year”.
Such difficulties could also continue in upper management. There have been consistent rumours that ousted boss and founder Ray Kelvin, who still has a 35 per cent stake in the company, could make a rescue bid. Any further plunge could only increase his desire to stage a comeback.