In a trading update for the 16-week period from 11 August to 1 December, UK clothing retailer Ted Baker announced it has appointed an independent law firm Herbert Smith Freehills LLP to conduct an external investigation into the complaints about forced hugging in the company.
The law firm will report into a committee of the company’s non-executive directors that will be chaired by Sharon Baylay.
Ted Baker trading update
In its trading update, Ted Baker also revealed the group’s revenue decreased by 0.2% compared to the same period last year.
Ted Baker said that in the UK, Europe and the East Coast of America, trade was affected by the unseasonal weather at the start of the period and trading in the UK continues to be impacted by ‘well-publicised challenges facing some of our trading partners’.
Meanwhile, retail sales including e-commerce increased by 2.3% for the period. E-commerce sales increased by 18% and represented 30.3% of total retail sales for the period. Total retail sales for the last eight weeks period at the group increased by 4%.
However, wholesale sales for the period decreased by 6.5% ‘due to the earlier timing of deliveries in the first half of the year’.
According to the update, Ted Baker continues to ‘anticipate mid to high single-digit wholesale sales growth (in constant currency) for the full year’.
It added that the board remains ‘mindful of the challenging markets in which the group operates and is focussed on making further progress for the full year’.
Ted Baker founder and chief executive Ray Kelvin CBE said: “We are pleased with the brand’s continued expansion, which is a reflection of the strength of the Ted Baker brand and the design and quality of our collections.
“The investment in our flexible business model ensures that the Ted customer has multiple channels to engage with the brand and underpins our long-term development. Our global e-commerce business continues to grow well and is complemented by our digital marketing strategy and unique stores that showcase the brand.”
Ted Baker’s ‘forced hugging’
This week the fashion retailer’s founder Ray Kelvin has been accused of inappropriate behaviour by former and current staff.
The group’s employees have complained about ‘forced hugging’ by Kelvin. According to the Guardian, more than 60 employees have accused Kelvin of making them feel uncomfortable by hugging them, kissing their ears and giving them shoulder massages.
According to Financial Times, an anonymous member of staff said the hugs are a ‘part of a culture that allows harassment to go unchallenged’.
A spokesperson for Ted Baker said: “Ray, and the company’s leadership, have always prided themselves on Ted Baker being a great employer and business to work with. Accordingly, they and the board take these concerns very seriously and the board has directed a thorough and urgent independent external investigation is carried out into these matters.
“An independent committee of the Non-Executive Directors has been appointed to ensure that the views and concerns are recognised and carefully considered and that appropriate responses are taken forward.”
However, it’s not just employees that have been subject to hugging by Kelvin.
Financial Times reporter Claer Barrett revealed that instead of the usual polite handshake Kelvin offered a ‘bear hug’ at the start of an interview. Barrett said she wasn’t the only one who was offered ‘his outstretched arms’ as the Ted Baker founder also hugged both female and male members of the PR team.
Meanwhile, a Retail Week reporter has also experienced Kelvin’s forced hugging and a kiss on a cheek which concluded their interview this summer. Becky Waller-Davies met with the Ted Baker founder to discuss the hugging culture at the company, which according to him is nothing but a ‘positive connection’.
Ted Baker’s share price
Amid the forced hugging scandal, the group shares have fallen from 1,828p on 30 November to 1,467p on 5 December a 19.66% decrease.
Currently, the Ted Baker share price sits at 1,479p, the lowest it has been in the last five years, giving it a market capitalisation of £654.15m