Fashion retailer Ted Baker has revealed that an accounting overstatement – thought to originally amount to between £20m-£25 – is actually almost three times higher at £58m.
In December last year, Ted Baker appointed ‘Big Four’ accountancy firm Deloitte to undertake a comprehensive review of its stock inventory position. In a short update, Ted Baker has revealed the review has now “largely concluded” and that the value of inventory held on the group’s balance sheet at 26th January 2019 was overstated by £58m.
It added this is “materially higher” than the £20-25m preliminary assessment and that as previously stated, the overstatement is a non-cash item and related to prior years.
The news comes after the company also drafted in consultancy firm AlixPartners to conduct a review of its operations.
In October last year, Ted Baker reported losses of £23m for the first half of the year, which it said was largely due to exceptional costs of £17.4m. It added this was incurred as a result of actions taken to strengthen the brand, and included £11.8m in respect of the restructure of the legacy Asia businesses and £3.5m in relation to the footwear acquisition in January 2019.
Additionally, group revenue decreased by 7% to £303.8m and retail sales including e-commerce was down 2.5% to £214.5m.
It marks an eventful year for the clothing retailer which has already seen three profit warnings and its founder, Ray Kelvin, resigned following allegations of improper conduct at the company.