Ted Baker has appointed a law firm to carry out an independent investigation into allegations of “forced hugs” against its boss.

The fashion chain said Herbert Smith Freehills would conduct the inquiry, which would report to a committee of its non-executive directors led by Sharon Baylay.

The harassment allegations made against chief executive Ray Kelvin also include asking young female staff to sit on his knee, cuddle him or let him massage their ears.

Ted Baker denied there was a culture of 'forced hugs' at the firm
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Ted Baker says it is investigating the allegations against CEO Ray Kelvin

The embattled company’s share price has fallen by a quarter since the claims emerged at the weekend when an online petition, claiming to be backed by more than 200 current or former employees, called on the company to end “a culture that leaves harassment unchallenged”.

Ted Baker announced details of its inquiry while giving a scheduled trading update for the 16 weeks to 1 December which showed a fall in overall sales.

It said a 6.5% drop in wholesale division revenue, likely a consequence of the collapse of House of Fraser, was largely offset by a 2.3% increase in retail sales.

Total revenue slipped by 0.2%, it reported.

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It blamed unseasonably warm weather and the wider challenges in the retail market that have seen shoppers watch their spending because of Brexit uncertainty.

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