LONDON, United Kingdom — Shares of British fashion designer and retailer Ted Baker Plc slumped as much as 15 percent Monday as the company said it was investigating an employee petition demanding that Chief Executive Officer Ray Kelvin stop hugging them.
The company said in a statement that it appointed a committee of non-executive directors to look into allegations of a “culture of harassment.” The claims are “entirely at odds” with Ted Baker’s values and those of Kelvin, the retailer said in a separate emailed comment, confirming that it had “very recently” been made aware of the petition.
The comments from Ted Baker followed a report in the Sunday Times of London on the employee petition. The CEO is also accused of making sexual innuendos, stroking people’s necks and other forms of verbal or physical harassment, the newspaper said.
Kelvin, who founded the company in Glasgow, Scotland, 30 years ago, “greets many people he meets with a hug,” with shareholders, investors, suppliers, partners, customers or colleagues potential recipients of the gesture, Ted Baker said in its email. “Hugs have become part of Ted Baker’s culture, but are absolutely not insisted upon.”
The slump in Ted Baker stock Monday extended its year-to-date decline to about 42 percent. Analysts have cut earnings estimates for the company after a slowdown in sales growth was blamed on unseasonable weather, Brexit risks and troubles faced by some trading partners such as department store chain House of Fraser. A sales update is due from Ted Baker on Tuesday.
Kelvin had a fortune of about $400 million as of Monday, based on his 35 percent stake in Ted Baker, according to the Bloomberg Billionaires Index. He’s the second U.K. fashion mogul to face harassment allegations in recent months after Topshop owner Philip Green in October. Green has denied the allegations against him.
Ted Baker was 12 percent lower as of 11:31 a.m. in London.
By Joe Easton, with assistance from William Mathis and Andrew Heathcote; editors: Beth Mellor, John Viljoen and Eric Pfanner.