Shares of fashion designer and retailer Ted Baker lost about £130m (€145m), or a sixth of their value, as the company said it was investigating an employee petition demanding chief executive Ray Kelvin stop hugging them.
The company said it appointed a committee of non-executive directors to look into allegations of a “culture of harassment”.
The claims are “entirely at odds” with Ted Baker’s values and those of Mr Kelvin, the retailer said in a separate comment, confirming it had “very recently” been made aware of the petition.
The comments from Ted Baker followed a report on the employee petition. The CEO is also accused of making sexual innuendos, stroking people’s necks and other forms of verbal or physical harassment.
Mr Kelvin, who founded the company in Glasgow 30 years ago, “greets many people he meets with a hug”, with shareholders, investors, suppliers, partners, customers or colleagues potential recipients of the gesture, Ted Baker said.
“Hugs have become part of Ted Baker’s culture, but are absolutely not insisted upon,” it said.
The slump in Ted Baker shares extended its year-to-date decline to about 42%.
Analysts have cut earnings estimates for the company after a slowdown in sales growth was blamed on unseasonable weather, Brexit risks and troubles faced by some trading partners such as department store chain House of Fraser. A sales update is due from Ted Baker later today.
Mr Kelvin had a fortune of about £284m based on his 35% stake in Ted Baker.
He’s the second UK fashion mogul to face harassment allegations in recent months after Topshop owner Philip Green in October. Green has denied the allegations.