(Reuters) - Ted Baker’s chief executive and chairman quit on Tuesday as the British fashion retailer warned its full-year profit will fall more than expected and suspended its dividend due to weak Black Friday sales, sending its shares to a 16-year low.
Pressure has mounted on Ted Baker’s (TED.L) management team since it disclosed a week ago that it may have overstated inventory by as much as 25 million pounds ($32 million).
Lindsay Page is leaving after just eight months in charge of Ted Baker, which has been struggling with weak consumer demand and misconduct allegations against its founder and former CEO Ray Kelvin, which he has denied.
“The last 12 months has undoubtedly been the most challenging in our history,” Ted Baker said in a statement as its shares fell as much as 30% to 16-year lows.
"Ted Baker is truly having the nightmare before Christmas," AJ Bell investment director Russ Mould said as the share price fell by as much as 35%, taking its losses for the year to 78%. In contrast to some other British retailers, Ted Baker said its performance during November and the Black Friday sale period was below expectations, leading it to cut its pre-tax profit forecast to a minimum of 5 million pounds.
COMING APART AT THE SEAMS
The latest profit warning and the suspension of its dividend raised immediate questions about how Ted Baker, which said it had appointed independent consultants to review its costs and business model, would now get back on track.
"This is a train wreck of an update, and it feels like the company is coming apart at the seams," CMC Markets analyst David Madden said after Ted Baker cut its pre-tax profit forecast to a minimum of 5 million pounds for 2019.
This compared with a 50.9 million pound profit last year.
Kelvin still has a 34.9% stake in Ted Baker, Refinitiv Eikon data shows, and there has been media speculation that he would support a private equity buyout of the business, whose first store opened in 1988 in Glasgow, Scotland.
The company, which started life as a specialist in men's shirts, said its performance during November and the Black Friday sale period, in contrast to some other retailers, was below expectations and discounting had hit gross margins.
In order to fill the gaps left by Page and Bernstein, recently appointed Chief Financial Officer Rachel Osborne will take over as interim CEO, while Sharon Baylay will become acting chair, Ted Baker said.
Ted Baker reported a pretax profit of 50.9 million pounds last year, its first annual profit drop in ten years.
Ted Baker said its recently appointed Chief Financial Officer Rachel Osborne will take over as interim CEO, while Sharon Baylay will become acting chair after the departure of chairman David Bernstein.
Page, who has been with Ted Baker for more than 20 years, recently described business conditions as the worst in decades amid lackluster sales.
His appointment as CEO in April was seen as a turning point for Ted Baker, which was trying to move on from the bad publicity prompted by Kelvin’s habit of hugging colleagues.
Ted Baker was also in the process of shaking up its board as part of a wider push to foster a change in corporate culture.