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Ted Baker issues profit alert and warns of further hit | Business News

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Ted Baker shares have plunged after it issued a profit warning for its last financial year and said the figure could fall even further.

In an unscheduled update to the market the fashion chain, which is facing pressures from a tough consumer environment and misconduct inquiry against its chief executive, said a series of costs had hit its bottom line.

It warned pre-tax profit expectations had fallen from almost £74m to £63m for the year to 26 January.

The company blamed three non-cash headwinds: £2.5m from foreign currency movements, additional product costs of £2.5m and a £5m writedown on the value of “aged stock” in Asia and the US.

Ted Baker said that the downgrade had not taken account of other factors including its independent investigation into allegations of “forced hugs” and harassment against founder Ray Kelvin and its exposure to House of Fraser’s initial collapse last summer.

It is due to present full-year results to the City on 21 March.

Shares were up to 17% down in early deals.

The company saw a strong Christmas despite negative PR over the allegations against Mr Kelvin which prompted him to step aside temporarily pending the conclusion of the inquiry.

Ted Baker denied there was a culture of 'forced hugs' at the firm
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The conduct of Ted Baker’s founder Ray Kelvin is being examined by a legal firm on the company’s behalf

Last year was tough for fashion retailers generally as unseasonable weather and more cautious consumers combined to pressure sales.

A research note issued by the Jefferies investor service said it expected Ted Baker to bounce back from its pressures but added: “On the upside these are all non-cash impacts and net borrowing remains the same.

“But on the downside these add to the concern that the quality of Ted’s earnings (which used to be exceptionally good) has slipped.

“Exceptional costs this year include the costs of the independent investigation into management behaviour and company culture; debtor balances owed by House of Fraser (which went into administration before being given a lifeline by Sports Direct), the acquisition of licencee No Ordinary Shoes, and non-cash impairments of retail assets.

“We do expect Ted to bounce back from this extremely tough year, but its historical premium rating may have taken another blow.”

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