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Ted Baker blunder sees inventory overstated by £58m

Ted Baker has said inventory on its balance sheet was overstated by £58m in a blunder that sent share prices falling further.

The group said the overstatement was reported at the end of the previous financial year ending January 2019.

When the group announced an independent review into the situation by accountants at Deloitte last month it had estimated the overstatement would be between £20m and £25m.

In a statement, Ted Baker said: “The Deloitte review has now largely concluded and Ted Baker expects to report that the value of inventory held on the group’s balance sheet at 26th January 2019 was overstated by £58m.

“This is materially higher than the £20-25m preliminary assessment announced on 2 December 2019. As previously stated, the overstatement is a non-cash item and related to prior years.”

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Shares were down more than 6% on news of the inventory blunder, having lost more than 80% over the past year.

Ted Baker had been battling to deliver a turnaround plan under new chief executive Lindsay Page, who took over in April last year.

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But Mr Page resigned in December, after the company scrapped its shareholder dividend payout and said it was expecting annual pre-tax profits of between £5m and £10m after worse-than-expected trading in November and over Black Friday.

This compares with pre-tax profits of £50.9m the previous year.

At the time Mr Page resigned, Ted Baker said the past year has been the “most challenging in our history”, as it reported a 5.5% drop in retail sales with currency effects stripped out for the 17 weeks to 7 December.

Mr Page had been hired after the resignation of Ted Baker founder Ray Kelvin.

Mr Kelvin had been accused of inappropriate behaviour, including “forced hugs”, allegations he has denied.

The company opened its first store in Glasgow in 1988 and grew to have 560 stores and concessions globally.

SOURCE : https://news.sky.com/story/ted-baker-blunder-sees-inventory-overstated-by-58m-11914801

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