Fashion group Ted Baker PLC (LON:TED) has warned profits this year will be lower than expected due to stock write-downs, foreign exchange and additional product costs.
Profit before tax is now expected to be in the region of £63mln, but this is before another raft of one-off charges due to the Ray Kelvin investigation, House of Fraser bad debts and the acquisition of No Ordinary Shoes.
Chief executive Ray Kelvin is on leave of absence while an investigation into allegations of inappropriate behaviour is conducted.
This follows an online campaign claiming to represent over 200 employees that called on the company to end “forced hugging” and “a culture that leaves harassment unchallenged.”
Law firm Herbert Smith Freehills was appointed in December to conduct an investigation into claims Kelvin forced hugs and kisses on employees.
House broker Liberum chopped its price target to 2,800p following the update but remains bullish
“There is no reason to change our view on the long-term fundamentals and we keep a buy," said the broker.
Peel Hunt already has a much lower target price of 1,400p, but said that it expects downgrades to follow for next year as well.
The fact that these essentially one-off items were released in a trading update rather than as an exceptional note to the preliminary statement raises some questions, said the broker.
Peel Hunt added the new forecast compares with its own estimate for the year to January 2019 of £72.6mln and consensus of £74mln.
'Hold' remains its rating.
Shares fell 13% to 1,738p.
- adds broker comment, share price -