Ted Baker has revealed a fall in sales in its third quarter as it struggles to keep its head above water over harassment allegations against its chief executive.
Last weekend a petition, signed by over 1000 staff members, accused founder Ray Kelvin of making staff “uncomfortable” by allegedly enforcing a “hugging” culture on colleagues, as well as asking young female staff to “sit on his knee, cuddle him, or let him massage their ears”.
The fashion retailer sought to quell the growing PR crisis by announcing an “independent internal investigation” into the accusations would be conducted by Herbert Smith Freehills.
It is understood that Herbert Smith will report to a committee of non-executive directors chaired by Sharon Baylay.
Alongside this announcement, Ted Baker revealed less-than-positive sales in the 16 weeks to December 1, seeing a 0.2 per cent decline.
Sales were reportedly dragged down by a 6.5 per cent drop in wholesale sales, offset slightly by a 2.3 per cent increase in retail sales, including online.
Since the allegations against Kelvin broke, Ted Baker has seen its share prices dive to a five-year low.
“The latest results show that business success isn’t all about positive sales figures,” Begbies Traynor’s partner Julie Palmer said.
“The drop in share prices due to some negative news about its CEO has not been softened by its performance.
“The model Ted Baker has set up of a successful high street supported by a solid, and growing, online offering is a hybrid for the modern retailer in the high end of the market.
“However, the way that it handles the more emotive, hearts and minds side of the business will decide whether it recovers its value and continues to thrive.
“Today’s retail market is filled with socially conscious consumers, if this crisis is not dealt with it will eventually impact sales figures.”