(Reuters) - Ray Kelvin resigned as chief executive of British retailer Ted Baker on Monday, seeking to allow the fashion brand he founded to move on from misconduct allegations stemming from his habit of hugging colleagues.
Ted Baker had announced an independent investigation into misconduct claims against Kelvin in December after an online campaign claiming to represent over 200 employees asking to end “forced hugging” and “a culture that leaves harassment unchallenged.”
The retailer said the investigation would continue until the end of the first quarter or early in the second quarter with the focus turning to Ted Baker’s policies, procedures and handling of complaints.
“Kelvin has denied all allegations of misconduct. He has, however, today agreed to resign with immediate effect from his position as chief executive officer and as a director of Ted Baker,” the company said in a statement on Monday.
The Christmas shopping season went relatively well for the retailer even after the emergence of the allegations against Kelvin, 63, who remains the company’s biggest shareholder with a stake of about 35 percent.
However, analysts said a plunge in shares last week after the retailer said earnings for the 2018-2019 financial year would nevertheless miss forecasts, may have contributed to Kelvin’s decision to go. The company publishes full year earnings on March 21.
“I’ve decided that the right thing to do is to step away from Ted and allow the business to focus on being the outstanding brand it is so it can face 2019 with fresh energy and renewed spirit,” Kelvin said in a statement.
Ted Baker shares fell 4.8 percent in initial trade before making up ground to trade 4.6 percent higher by 1605 GMT.
“Ted clearly needs to draw a line under Ray’s behavior and move forward,” Jefferies analysts said in a note to clients.
(Graphic: Ted Baker trails FTSE 250 link: tmsnrt.rs/2UnsBAw).
The investigation into Kelvin’s conduct comes at a time when the #MeToo movement has gained traction globally, with many voices speaking out against alleged harassment in the workplace.
Ted Baker opened its first store in Glasgow in 1988 with quirky details on suits, shirts and dresses helping the company stand out from rivals.
Kelvin was appointed Commander of the Order of the British Empire in 2011 for services to the fashion industry. He took a leave of absence from Ted Baker soon after the emergence of the allegations in December.
Acting Chief Executive Officer Lindsay Page has agreed he would continue in the role while David Bernstein will act as executive chairman, the company said.
“We are determined to learn lessons from what has happened and from what our employees have told us and to ensure that, while the many positive and unique aspects of Ted’s culture are maintained, appropriate changes are made,” Bernstein said.
Bernstein has indicated he will continue in the position until no later than Nov. 30, 2020, by which time a successor will be appointed, the company said.
Ted Baker has more than 500 stores and concessions globally.
(Ted Baker grows more than ten-fold under CEO Kelvin link: tmsnrt.rs/2UkN3BI).
Reporting by Noor Zainab Hussain, Arathy S Nair, Sangameswaran S in Bengaluru; editing by Bernard Orr, Jason Neely and Keith Weir