Shares in clothing retailer Ted Baker surged following the resignation of controversial founder and chief executive Ray Kelvin.
Mr Kelvin resigned, seeking to allow the fashion brand move on from misconduct allegations stemming from his habit of hugging colleagues. The company’s shares jumped by nearly 5%.
Ted Baker had announced an independent investigation into misconduct claims against Mr Kelvin in December after an online campaign claiming to represent over 200 employees asking to end “forced hugging” and “a culture that leaves harassment unchallenged.” The retailer said the investigation would continue until the end of the first quarter or early in the second quarter with the focus turning to Ted Baker’s policies, procedures and handling of complaints.
“Kelvin has denied all allegations of misconduct. He has, however, today agreed to resign with immediate effect from his position as chief executive officer and as a director of Ted Baker,” the company said in a statement.
The Christmas shopping season went relatively well for the retailer even after the emergence of the allegations against Mr Kelvin, who remains the company’s biggest shareholder with a stake of about 35%.
However, analysts said a plunge in shares last week - after the retailer said earnings for the 2018-2019 financial year would nevertheless miss forecasts - may have contributed to Mr Kelvin’s decision to go. The company publishes full year earnings on March 21.
“I’ve decided that the right thing to do is to step away from Ted and allow the business to focus on being the outstanding brand it is so it can face 2019 with fresh energy and renewed spirit,” Mr Kelvin said in a statement.
Acting chief executive Lindsay Page has agreed to continue in the role while David Bernstein will act as executive chairman, the company said.
“We are determined to learn lessons from what has happened and from what our employees have told us and to ensure that, while the many positive and unique aspects of Ted’s culture are maintained, appropriate changes are made,” Mr Bernstein said.
Mr Bernstein has indicated he will continue in the position until no later than Nov. 30, 2020, by which time a successor will be appointed, the company said.
Ted Baker has more than 500 stores and concessions globally.