// Auditors find that the value of Ted Baker’s stock inventory was overstated by £58m
// This almost 3 times as worse as the initial estimates of between £20m-£25m late last year
// The accounting blunder follows a tough year for Ted Baker, with profit warnings, a scandal and the exit key leaders
Ted Baker has revealed that its accounting blunder is actually almost three times as bad as it first thought, after auditors ripped apart the retailer’s stock assessment.
Auditors at Deloitte found that the value of Ted Baker’s stock inventory was overstated by £58 million.
This is a huge increase on the initial estimates of between £20 million and £25 million late last year.
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The news shows that the investigation is largely completed, said Liberum analysts Wayne Brown and Adam Tomlinson.
“The statement is light on information as to how this error arose and we await the conclusion of a further review by Freshfields which should hopefully be completed by the time of the prelims in late March,” they said
On December 2, Ted Baker revealed that it had discovered a discrepancy in its accounts from January 26 last year.
The fashion retailer said at the time it had appointed law firm Freshfields Bruckhaus Deringer to review the issue.
It later hired Deloitte to comb through the accounts.
The accounting blunder followed a tough year for Ted Baker, with profit warnings, a sexual harassment scandal, declining shares and the exit of key leaders.
Shares fell to 16-year lows in December when chief executive Lindsay Page and chairman David Bernstein announced they were stepping down, after yet another profit warning.
As he resigned, Page said the last 12 months had been the “most challenging” in Ted Baker’s history.
Page had only been chief executive for about nine months, after taking over from founder Ray Kelvin, who was caught up in a harassment scandal following allegations from staff.
Co-workers alleged that Kelvin, who denies any wrongdoing, kissed their ears and instituted “forced hugs”.
Speculation has mounted that Ted Baker could face a takeover bid from Kelvin or another investor.
Kelvin still owns 35 per cent of Ted Baker.
with PA Wires
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