Ted Baker has warned that it will need to write down the value of its inventories by around 25 per cent — much worse than initially feared — in yet another blow to the flailing fashion retailer.
The group said on Wednesday that an independent review found its stock, as reported at the end of the previous financial year ending in January 2019, was overstated by around £58m.
The estimate by accountants at Deloitte was more than double compared with a previous calculation of £20 to £25m made when the group first announced its review last month.
The clothing group has floundered since allegations came to light of inappropriate behaviour towards staff by its founder Ray Kelvin.
In December, its chief executive Lindsay Page resigned after just months in the job as it issued its fourth profit warning of the year, when it said full-year profits would drop by as much as 90 per cent, with little expectation of an improvement in trading.
Shares dropped 3 per cent on Wednesday, and have plummeted around 80 per cent over the past year.
Analysts have suggested the inventory review was part of early stage work by new finance chief Rachel Osborne, who is also standing in as interim chief executive.
John Stevenson at Peel Hunt said the new figure suggests a “huge” overvaluation in Ted Baker’s inventories and must relate to more than simply accounting provisions on the previous season’s stock.
“Our concern is focused on the reason for the error,” he said, adding that the scale of the overstatement points to a “more fundamental problem or error.”
Ted Baker reiterated that any adjustments were not related to this financial year.
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