Ted Baker share price crashes as bosses quit after profit drop
Ted Baker’s share price plummeted to a 16-year low this morning after two executives quit, plunging the stricken retailer further into crisis as it slashed its profit forecast and suspended its dividend.
Shares dropped as much as 35 per cent in morning trading following the departure of chief executive Lindsay Page and executive chairman David Bernstein.
Read more: Ted Baker share price sinks into acquisition territory after £25m balance sheet error
Ted Baker issued the latest in a string of profit warnings in a trading update this morning, cutting its full-year expectations to a minimum pre-tax profit of £5m following poor Black Friday sales. Last year, the company reported a pre-tax profit of £50.9m.
The retailer, which has also launched a cost review and asset review, has now dropped 78 per cent in value since the start of the year.
CMC Markets’ David Madden described the statement as “a train wreck of an update”, adding: “it feels like the company is coming apart at the seams”.
This updates continue a turbulent year for Ted Baker, whose shares dropped last week after it disclosed a £25m balance sheet error.
The retailer has launched an investigation into the error, and said is estimates that the value of its stock had been overstated by between £20m and £25m.
Page took over as chief executive in April after founder Ray Kelvin stepped down following allegations of sexual harassment. Kelvin denies the allegations.
“The last 12 months has undoubtedly been the most challenging in our history,” the company said this morning.
Ted Baker said it anticipates “difficult trading conditions will continue, and therefore it is appropriate to take a more cautious outlook for the remainder of the financial year”.
“In recent years, lower-cost clothing brands like Primark have seen their business increase, so too have luxury goods like LVMH. Brands like Ted Baker that fall into the middle of the price range are coming under pressure, which ties in with middle-income earners – the squeezed middle,” said Hewson.
Rachel Osborne will become acting chief executive with immediate effect, and the search for Page’s replacement will begin in January, the company said.
Sharon Baylay has become the retailer’s acting chair of the board, while the hunt for Bernstein’s successor is already underway. It had been announced in March that Bernstein would step down by November 2020.
“On behalf of the Board, I would like to thank David for his contribution to the board of Ted Baker,” said Baylay. “We wish David every success for the future.”
Baylay also thanked Page for his “significant contributions” during his 22 years at the retailer, adding: “Lindsay played a key role throughout the development of Ted Baker into an international brand.”
“Page’s days were already looking numbered given the inventory blunder related to prior years when he was finance director,” said AJ Bell’s Russ Mould.
Read more: Ted Baker hires headhunters to replace chairman
“There were some rumours earlier this year that Kelvin may take the business private in order to regain control, given that he already owns 34.87%,” he added.
“It feels like each passing day since his departure creates an opportunity to buy even cheaper given how the share price has plummeted.”