British clothing and accessories retailer Ted Baker has posted a slight decline in group revenue for the 16-week period between August and December as lower wholesale sales overshadowed retail sales growth.
The fashion chain also confirmed that it has appointed law firm Herbert Smith Freehills to conduct an independent external investigation regarding claims against its chief executive and founder Ray Kelvin relating to his habit of hugging business colleagues.
“While recent news flow is unhelpful, we believe the impact on the group’s brand strength and longer-term growth prospects is likely to be minimal,” Liberum analysts said.
The analysts added that the company’s marker as a global lifestyle brand leaves it far better placed than most in the more challenging retail space that currently persists.
Ted Baker, which operates 544 stores, concessions and outlets worldwide, had been focusing on its fast-growing online and wholesale businesses to counter retail sluggishness as consumers clamp down on spending.
Group revenue fell 0.2% for the 16-week period from August 11 to December 1. However, wholesale sales fell by 6.5% due to the earlier timing of deliveries in the first half of the year.
Total retail sales — including e-commerce — rose by 2.3%. In the UK, Europe and the east coast of America, trade was hurt by the unseasonal weather at the start of the period, Ted Baker said.
The world’s fifth-largest economy risks stumbling into a disorderly exit from its biggest trading partner, the EU, if the British parliament votes down Prime Minister Theresa May’s withdrawal agreement next Tuesday.
Meanwhile, Ted Baker will report to a committee of the company’s non-executive directors that will be chaired by Sharon Baylay, a former Microsoft executive who joined the board in June.
The law firm appointment follows reports that Mr Kelvin gave staff members unwanted hugs and asked female employees to sit on his knee.
The CEO also pushed an executive against the wall in a glass meeting room in 2016, according to sources.
The company’s shares rose as much as 4.3% after the its trading update.
The shares had slumped by about one-fifth this week since reports appeared.
The company said it continues to anticipate mid- to high-single-digit wholesale sales growth in constant-currency terms for the full year.
The “robust” performance shows the resilience of Ted Baker’s business model, analysts said.
Reuters and Bloomberg