Ted Baker says its accounting scandal may be more than twice as big as previously thought

on Jan 22, 2020
Updated: Mar 11, 2020
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  • Ted Baker says its stock value as per the balance sheet on January 26th, 2019, was overstated by a massive £58 million.
  • Ted Baker didn't announce reasons for overstatement but said Deloitte is expected to release its review results in March.
  • Ted Baker lost around 80% in the stock market following an allegation of misconduct on the founder, Ray Kelvin.

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The
British luxury clothing retail company, Ted Baker, announced on Wednesday its
accounting scandal may turn out to be over twice as big as previously thought. Ted
Baker was weighed heavily by the scandal in 2019 that saw the shares prices
fall by 10% last year.

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As
per the announcement, the fashion retailer highlighted that its stock value as
per the balance sheet on January 26th, 2019, was overstated by a
massive £58 million. Previously, the company had estimated it to be a
difference of £25 million.

Ted
Baker Hasn’t Announced Reasons For The Overstatement

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While
reasons that may have contributed to the overstatement were not revealed by the
fashion
retailer, Ted Baker, however
, added that Deloitte business consultants is
in the final phase of its review with the preliminary results expects to be
publicized later this year in March.

The
initial disclosure of the overstatement was made in December, following Rachel
Osborne having taken over the finance department of the company. Later in the
same month, she was promoted to the acting chief executive officer of Ted Baker
after her predecessor, Lindsay Page, announced an unexpected departure.

Complications
for Ted Baker were not confined only to the accounting scandal in 2019.
Operations and overall performance were also affected by the retailer’s
decision of suspending dividend payments. Profit warnings and management
changes were among a few of the other challenges that the company faced in
2019. The founder of Ted Baker, Ray Kelvin, was allegedly involved in
misconduct last year. Despite actively denying the claim, the company saw it
fit to shuffle its management.  

Ray
Kelvin Was First Alleged Of Misconduct In December 2018

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The
allegation was first made in December 2018 when colleagues reported an uncanny
habit of Kelvin to hug his colleagues. Ever since the first allegation, the
company has lost 80% of its value in the stock market.

As
of December, Ted Baker has also brought Freshfields
Bruckhaus Deringer law firm
on board in order to perform another independent
review of the accounting scandal along with Deloitte.

The
$139.53 million company remains under pressure with the start of the new year.
The stock opened at 432.80 GBX on January 2nd. With an around 30%
loss so far, the stock is currently exchanging hands at around 305 GBX. Hitting
290 GBX level, Ted Baker traded at its lowest in over a decade on Wednesday.

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