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Ted Baker CEO Resigns From U.K. Apparel Chain After Misconduct Allegations

Ted Baker Plc Chief Executive Officer Ray Kelvin resigned from the U.K. apparel chain amid an investigation of his conduct, the latest in a string of men to be unseated by allegations of behavior demeaning to employees.

Kelvin, who founded the company in 1988, had taken a voluntary leave of absence from the CEO role in December as the board hired law firm Herbert Smith Freehills LLP to investigate allegations that he gave workers unwanted hugs and asked female employees to sit on his knee. He has denied the accusations.

The shares fell as much as 5 percent after the resignation, which stems from allegations that originally surfaced in an online petition. Kelvin’s departure sets up one of the U.K.’s biggest retail success stories for an uncertain future, because of its founder’s close association with the chain.

Kelvin owns about 35 percent of the London-based company, and his holding has a market value of about 280 million pounds ($370 million). At Ted Baker, he maintained a “hug zone” in the office near his desk and was known for quirky practices like keeping his face partially covered with clothing or other objects in many public photos.

The founder built the chain from a single shirt shop in Glasgow into a company with about 600 million pounds in sales, with stores across the U.K. as well as a handful of overseas markets like the U.S. and China. It’s known for upmarket casual clothing for men and women, selling via its own outlets as well as concessions in department stores.

Online Petition

Complaints about Kelvin’s conduct originally surfaced in an online petition on the website Organise. After initial reports about unwanted hugs, others followed. In one alleged incident, the CEO pushed an employee against a wall in a glass meeting room in 2016 while dozens of staffers looked on, according to three people who were there and asked not to be named, Bloomberg reported in December.

The law firm’s investigation continues and is expected to conclude at the end of the first quarter or early in the second quarter, Ted Baker said.

Other executives who have stepped down over inappropriate behavior or relationships in the workplace have included movie producer Harvey Weinstein, former CBS Corp. chief Les Moonves and former Pixar executive John Lasseter.

At Ted Baker, acting CEO Lindsay Page will continue in the position. Chairman David Bernstein will “provide additional support” as executive chairman, the company said, but will leave that role by Nov. 30, 2020.

“As a shareholder in the business I’ll support Lindsay in his leadership and be available to him and the team wherever I can offer helpful advice,” Kelvin said in an emailed statement.

The fashion chain’s shares plunged last week after it said profit for the year was hurt by adverse currency movements and other factors. The warning stemmed from a new set of problems, including unexpected product costs and an inventory writedown, after the company earlier reported strong sales for the Christmas season.