LONDON — Shares in Ted Baker plc closed down nearly 8 percent on Monday at 3.66 pounds after the company said the value of inventory held on its balance sheet has been overstated.
The company said that, based on preliminary analysis, the board estimates an impact on value to range from 20 million pounds to 25 million pounds, but the error will have “no cash impact and will relate to prior years.”
As a result, the board has appointed the multinational law firm Freshfields Bruckhaus Deringer LLP, and will be appointing independent accountants to undertake a comprehensive review of the issue.
They will report to a subcommittee, chaired by independent director Sharon Baylay.
Ted Baker said all costs and fees associated with completing the independent review will be expensed in the period incurred and clearly identified as such.
“Ted Baker is committed to ensuring the independent review is completed in an efficient and transparent manner and will update the market as appropriate. While the review is ongoing, the company will not comment further.”
The company plans to announce its trading update for the 17-week period from Aug. 11 to Dec. 7 on 11.
The reported accounting error is the latest blow to hit Ted Baker, which over the past year has seen its profits slide and its founder and shareholder of reference, Ray Kelvin, quit the company as chief executive officer, following allegations of inappropriate behavior at work.
Kelvin has denied all allegations.
In April, company veteran Lindsay Page was named ceo, having joined as group finance director in 1997. He had been serving as acting ceo since December after Kelvin took a leave of absence.
That same month the company also confirmed that it wrapped up an investigation, spearheaded by the law firm Herbert Smith Freehills, into allegations about Kelvin’s conduct, and the company’s policies, procedures and handling of employee grievances.
Ted Baker said the conclusions and recommendations of the investigation focused on the company’s policies, procedures and handling of human resources-related complaints. As a result, the company said it has begun a refresh of its h.r. policies to ensure their alignment with current best practice.
Kelvin, who remains a shareholder in Ted Baker, resigned earlier this year following a leave of absence. Employees had accused him of inappropriate touching and behavior in the workplace, which he denies.
Ted Baker has not commented on the specific allegations made against Kelvin.