Ted Baker Begins Its Escape From Hug-Gate
(Bloomberg Opinion) -- Hug-gate has cost Ted Baker Plc its chief executive officer and chairman. The departures, announced Monday, suggest the retailer is about to move on from its difficulties. The shares certainly indicate this – after a brief dip they recovered, gaining as much as 6.3 percent.
But nothing could be further from the truth. While these steps are necessary, they’re only the first phase of efforts to stabilize and refresh the brand.
Ray Kelvin, the founder, resigned as CEO after allegations of inappropriate behavior. David Bernstein will step down as head of the board by Nov. 30, 2020. The company will announce the outcome of an inquiry by law firm Herbert Smith Freehills shortly.
A change of chairman is the right thing for the business. As I have argued, it shouldn’t have taken newspaper articles to flag to the board that Kelvin’s behavior could have been a problem.
Less clear is the wisdom of keeping Kelvin’s right-hand man, Lindsay Page, in the role of CEO – he’d been serving as acting chief executive once the founder stepped away from the business when the crisis broke in December. Ted Baker had been a good performer, but a recent profit warning raises questions about how well it had been managed in the founder’s absence. That the warning came just seven weeks after it had reaffirmed its guidance only heightens these concerns.
Its true that Kelvin – who denies all the allegations against him – was a visionary. But if even Chanel could do with a refresh after the death two weeks ago of Karl Lagerfeld, so could Ted Baker. There’s no denying that the brand is starting to look a bit tired. Injecting a little more interest would be no bad thing.
So, the first task of Bernstein’s successor should be to appoint a new chief executive. This would also enable Page to resume his focus on finance, operations and support for the creative team, something he did well with Kelvin. Getting any new CEO will take time. While Page is a safe pair of hands, and Ted Baker has other talent, this hiatus shouldn't go on too long.
As these changes get underway, everyone involved should make sure that Kelvin, who remains a 35 percent shareholder, lets them get on with it. As the company’s largest investor he could make life challenging for any new CEO. Just look the attacks on Superdry Plc from its co-founder and biggest shareholder, Julian Dunkerton – though he stepped down a year ago, he’s publicly criticized management for “value destruction” as part of a campaign to return to the board after it warned on profit last autumn.
For now, it looks like Kelvin is keeping quiet. Not only does the scandal seem to have taken its toll on him, by stepping down he seems to have recognized that something needed to give at the company.
He should continue that discipline. Superdry-style sniping from the sidelines, or too many words in Page’s ear, would prevent Ted Baker from truly moving on.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.
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