(Bloomberg) — Ted Baker plunged after warning that markdowns and “extremely difficult trading conditions” will hurt its results, another setback for the UK retailer reeling from a scandal over its founder’s behavior.
The apparel chain’s third move to ratchet down expectations this year followed the resignation of founder Ray Kelvin, after allegations that he gave employees unwanted hugs. While the company has moved to improve office conduct, it’s succumbing to a broader UK retail crisis that has prompted stores to slash prices in an effort to move unsold goods.
The shares fell as much as 30% early Tuesday in London — the most since they began trading in 1997.
Until the scandal emerged, Ted Baker was one of the UK’s more resilient retailers. As rivals struggled to compete with e-commerce and wrestled with a Brexit-related blow to consumer confidence, the chain’s stylish designs and quirky image drove shoppers to its stores.
The company said it plans to step up cost-cutting and initiatives such as monthly “drops” of new products to try to turn around its results. Yet the latest plunge in the shares, which lowered the company’s value to 454 million pounds ($576 million), prompted talk of potential bids.
“It is likely that speculation will rise, considering the market capitalization being so low,” Liberum analysts said in a note.
Ted Baker said it expects full-year underlying pretax profit to be as much as 13 million pounds below a previous estimate of 63 million pounds. The earlier guidance had already been reduced after the company said it was hurt by adverse currency movements and other problems.
Revenue rose only 1.9% at constant currencies in the 19 weeks ended Saturday, as it joined other retailers in marking down products. In addition to the UK, Ted Baker operates stores in markets such as the US and China.
“Ongoing consumer uncertainty in a number of key markets and elevated levels of promotional activity across our global markets have resulted in extremely difficult trading conditions during the financial year to date,” Ted Baker said in a statement, adding that it expects those factors to keep affecting its results for the rest of the fiscal year.
Ted Baker named Lindsay Page as chief executive officer in April after filling the role in an acting role since December, when Kelvin went on leave before later resigning.
The company in April concluded an investigation of Kelvin’s office comportment by an outside law firm, saying it would introduce new training for employees. Without commenting on specific allegations against him, Ted Baker said it would enhance oversight of office conduct and the company culture at the board level.