Ray Kelvin ‘distressed’ as he quits Ted Baker fashion empire over Hug-gate

The boss and founder of Ted Baker admitted a probe into sexual harassment allegations against him had been “deeply distressing” as he shocked the City by stepping down on Monday.

Ray Kelvin said: “The past few months have been deeply distressing and I’ll now be taking time privately with my family to consider what my next adventure will be.”

Kelvin, who still owns 34% of the retailer, has built Ted Baker up into a global fashion brand since starting the business in 1988.

There is an ongoing external investigation into allegations of inappropriate behaviour towards staff, led by lawyers at Herbert Smith Freehills, expected to last for at least an extra two months.

Independent non-executive directors have also been looking into the matter since claims of forced hugging emerged in December. Jefferies analysts said: “Whether Ray will face any potential criminal investigation, or whether Ted will have been found to have signed any NDAs, we do not know.”

Chief operating office Lindsay Page will stay acting chief executive under executive chairman David Bernstein.

Kelvin, who denies all allegations, will not receive any severance pay and any bonus payments he has earned for the past three years’ performance. He said: “As a shareholder in the business I’ll support Lindsay in his leadership and be available to him and the team wherever I can offer helpful advice.” The shares initially fell 5% on the news, before recovering to rise 3% to 1943p.

The brand, sold through 500 outlets, warned on profits last week, blaming stock write-downs, foreign exchange headwinds and other product-related costs. Retail analyst Nick Bubb said: “[The profit warning] implies that the business has not been run as conservatively as one might have hoped under Lindsay Page.”

The retailer will report annual figures on March 21.

Nicky Morgan: ‘Boards must act’

Nicky Morgan, the Tory MP who chairs the Treasury Select Committee, on Monday urged companies to do more to curb sexual harassment scandals.

She told the Standard: “The existence of NDAs should be disclosed to senior management, whether board of directors or local authority cabinets. They should know that these types of agreements are being signed.”