Ted Baker’s chief executive has been given a formal warning from the retailer’s allegations of “forced hugs”.
An online petition emerged over the weekend, which accused Ray Kelvin of forced hugs and kisses on employees and calling for the end of “a culture that leaves harassment unchallenged”.
Since the petition emerged, Ted Baker’s share price has fallen by 25%.
The law firm Herbert Smith Freehills will conduct an investigation into the harassment allegations.
In the group’s most recent trading update, Ted Baker described a “resilient performance”.
“We are pleased with the brand’s continued expansion, which is a reflection of the strength of the Ted Baker brand and the design and quality of our collections,” said Kelvin.
“The investment in our flexible business model ensures that the Ted customer has multiple channels to engage with the brand and underpins our long-term development. Our global e-commerce business continues to grow well and is complemented by our digital marketing strategy and unique stores that showcase the brand.”
Despite shares falling on the news of the chief executive’s allegations, George Salmon, an equity analyst at Hargreaves Lansdown, said the retailer was already facing difficulty.
“Even before the accusations around the conduct of Ray Kelvin emerged, Ted was facing a cocktail of challenges. UK department stores, a key sales outlet for Ted, are under pressure, while conditions aren’t much better across markets in the rest of the world,” he said.
“The timing of the claims is disrupting the all-important Christmas season, but the potential impact stretches beyond these next few weeks.”
“The scandal engulfing Mr Kelvin damages the Ted brand, and raises questions over the future leadership of the business, which has hitherto delivered consistent profit and dividend growth. That makes the findings of the independent investigation crucial,” he added.
Shares in the group (LON: TED) are currently trading +0.60% (1215GMT).