LONDON — From bad to worse — to even worse.
Ted Baker’s woes appear to be multiplying by the month, with the latest to emerge on Wednesday: An inventory accounting error on its balance sheet, revealed in December, is far worse than originally feared.
On Wednesday, the company confirmed that a review conducted by Deloitte on the original error has turned up an even larger one.
Ted Baker said the value of inventory held on the group’s balance sheet as of Jan. 26, 2019, had been overstated by 58 million pounds, more than double the amount that was originally flagged.
“This is materially higher” than the 20 million pounds to 25 million pounds preliminary assessment announced on Dec. 2, 2019, the company said Wednesday. “As previously stated, the overstatement is a non-cash item and related to prior years.”
Back in December the board appointed the multinational law firm Freshfields Bruckhaus Deringer LLP, and later named Deloitte to undertake a comprehensive review of the issue.
On Wednesday, the Ted Baker board said it would update the market when it announces the company’s preliminary results later this year.
Ted Baker’s share price was down 6.2 percent to 2.99 pounds in late afternoon trading.
The brand has undergone a merry-go-round of changes since the founder and shareholder of reference, Ray Kelvin, quit under a cloud last year with employees accusing him of inappropriate behavior.
Kelvin has denied all of the accusations, and retains his 35 percent stake in the company.
Last year, the company issued a series of profit warnings and has witnessed a revolving door of management since Kelvin’s departure as chief executive officer.
Last month, David Bernstein stepped down as executive chairman with immediate effect, while company veteran Lindsay Page abruptly resigned as ceo.
Sharon Baylay has assumed the role of acting chair until a permanent successor is appointed, while Rachel Osborne has agreed to become acting ceo. A search began this month for a new ceo.
The company also said it is expecting profit before tax in the fiscal year ending Jan. 25 to range from 5 million pounds to 10 million pounds, “dependent on Christmas trading and final year-end review.”
It has not issued a Christmas trading update. Trading in November and the Black Friday period was below expectations, with lower than anticipated margins and sell-through.
In the 17 weeks to Dec. 7, group revenue decreased 3.1 percent to 203.8 million pounds on a reported basis and 3.9 percent at constant currency.
The company said it would be undertaking a cost review, an asset review, and will immediately suspend dividends in the wake of its third profit warning in December.
“The last 12 months has undoubtedly been the most challenging in our history,” the company said last month.
“We are taking the necessary immediate actions to address underperformance and improve efficiencies across the wider group and are confident that these will return the group to a stronger position and continue the brand’s long-term development.”