Retailer under pressure
Ted Baker shaken by claims around Kelvin
Ted Baker has been a rare retail success story but has been hit by recent allegations
Ted Baker shareholders tried to shrug aside lurid stories around its founder to focus on the company’s generally positive performance.
The company continues to buck the retail trend but investors were reminded of the dangers of backing businesses closely tied to one person.
Allegations around the behaviour of founder Ray Kelvin have sent the shares into freefall and taken the shine off the company’s trading update.
Tom Stevenson investment director at Fidelity Personal Investing’s share dealing service said: “Third quarter trading is not exactly front of mind for Ted Baker’s shareholders this morning.
“For those who are interested in the numbers, the company said today that revenues fell very marginally, by 0.2%, as continued growth in retail sales narrowly failed to offset a decline in wholesale revenues.
“Ted Baker continues to be a rare retail success story, with a strong online presence supporting a stand-out presence on the High Street.
“It’s not the health of the sales performance that’s driving Ted Baker’s shares at the moment, of course, but rather the ongoing investigation into the alleged inappropriate behaviour of the company’s founder and driving force, Ray Kelvin.
“Ted Baker illustrates the risks of investing in companies that are so closely associated with one person, however talented, especially when they own a third of the company.
“The shares have fallen so far so fast because investors fear that without Kelvin the company will be less able to counter the headwinds blowing through the beleaguered High Street.
“Of all, the issues raised by the last week’s lurid stories, portfolio management may not be the most important, but Ted Baker shows the importance of diversification. Investors should never put their eggs in one basket.
“Until we hear more from the internal probe being led by non-executive director Sharon Baylay, the direction of the shares remains wholly unpredictable.”