Ted Baker’s working practices are to become the subject of an external investigation as the company’s share price hits a three-year low.
The London-listed stock was down as much as 15.4% in early trading on Monday, after a petition emerged over the weekend calling on the luxury clothing retailer to “end harassment” and accusing its founder of enforcing a “hugging” culture.
In a statement released on Monday, the company confirmed that an external investigation is to take place at the request of the board.
In addition, a committee of non-executive directors has been appointed to formulate a response to the allegations.
Shares were down 13% at 1,588p at lunchtime on Monday.
It comes ahead of a trading update on Thursday, when the company is expected to detail another challenging quarter as consumer confidence in the UK and eurozone remains low.
In an online petition posted to a site called Organise, founder and chief executive Ray Kelvin is accused of forcing hugging on colleagues, as well as asking young female staff to “sit on his knee, cuddle him, or let him massage their ears”.
While the company denied that hugging was “not insisted upon”, it promised to investigate the claims.
The firm said in a statement: “Ray greets many people he meets with a hug, be it a shareholder, investor, supplier, partner, customer or colleague. Hugs have become part of Ted Baker’s culture, but are absolutely not insisted upon.”
According to Organise, more than 100 Ted Baker staff have submitted stories of harassment.
Anonymous testimonies gathered by the site include several claims that Mr Kelvin massaged, kissed or inappropriately touched members of staff.
Others suggest a wider culture of harassment at the company, including one accusation of wolf-whistling levelled at a manager and inaction on the part of HR and senior management.
Several of the 64 respondents to a survey said they had reported the behaviour to HR but had been told “that’s just what Ray’s like”.
Ted Baker responded by saying it has “very clear and robust HR policies”.
The company added: “While the claims made are entirely at odds with the values of our business and those of our CEO, we take them very seriously and will ensure that a thorough independent investigation is carried out.
“We will then carefully consider the content and recommendations of that report.”
