Ted Baker lenders call for help at ailing retail chain

Lenders to Ted Baker, the struggling retailer which has been beset by financial and boardroom turmoil, have drafted in advisers to undertake an urgent assessment of its prospects.

Sky News has learnt that Ted Baker's banking syndicate, which includes Barclays and Royal Bank of Scotland, have appointed restructuring experts from FTI Consulting to undertake an independent business review (IBR).

The move, which comes weeks before it discloses details of its Christmas trading performance to investors, will underline ongoing concerns about the health of the company.

FTI's IBR is expected to take several weeks to conclude and could result in the lenders further tightening the terms on which they provide debt to the fashion retailer.

Ted Baker endured the most difficult 12 months in its 31-year history in 2019, parting ways with founder and chief executive Ray Kelvin after a series of allegations by current and former employees about his behaviour.

Mr Kelvin denied suggestions of improper behaviour, including that he had forced staff to engage in prolonged physical contact with him.

His departure preceded a series of profit warnings from Ted Baker, sending its shares plunging by almost three-quarters over the last year.

Nevertheless, the company is in no imminent danger of collapse, given the profitability of its international licensing operations.

Shortly before Christmas, the company announced that an accounting blunder had led it to overstate the value of its stock by up to £25m.

Accountants from Deloitte and lawyers from Freshfields Bruckhaus Deringer have been brought in to investigate the matter.

The disclosure of the inventory overstatement prompted the departure of Lindsay Page, Mr Kelvin's replacement as chief executive but who had previously served as Ted Baker's finance chief.

David Bernstein, the chairman, also left with immediate effect in December, while the senior independent director, Ron Stewart, also quit.

Searches are now under way for the trio's replacements.

Other advisers have also been drafted in, including AlixPartners, which is undertaking a review of the retailer's costs and its business model.

Investors will be watching closely for signs of improvement - or otherwise - in Ted Baker's trading performance when it publishes a pre-close update towards the end of the month.

In December, the company warned that trading during the previous month, including the 'Black Friday' period, had been "below expectations".

It added that it anticipated "that difficult trading conditions will continue, and therefore it is appropriate to take a more cautious outlook for the remainder of the financial year, which includes the key trading months of December 2019 and January 2020".

Mr Kelvin, who remains Ted Baker's biggest shareholder, has been linked with a possible bid to take the company private, although he is not thought to have any imminent plan to do so.

Investors such as Toscafund have taken advantage of the weak Ted Baker share price, snapping up a 12% stake in the company shortly before Christmas.

Deloitte's probe into the accounting error may ultimately provide awkward reading for KPMG, Ted Baker's auditor since 2002.

In 2018, KPMG was fined £3m by the Financial Reporting Council for breaching the watchdog's ethical standards in relation to non-audit services provided to the fashion retailer.

The penalty was reduced to £2.1m because KPMG proactively settled it.

Ted Baker declined to comment on Wednesday.