The outlook for struggling fashion chain Ted Baker went from bad to worse last week when it was revealed the business had overstated the value of its stock by £58m.

Ted Baker

The inventory error was discovered after an independent review into the retailer by Deloitte found that the hit to its balance sheet was more than twice the figure it had expected. Last month, Ted Baker said the figure was “up to £25m”.

The company’s shares fell more than 6% following the revelation.

The news comes just weeks after chief executive Lindsay Page and chairman David Bernstein stepped down on 10 December after the release of a profit warning that led the retailer’s share price to tumble more than 20%.

A statement from the business at the time said 2019 had “undoubtedly been the most challenging in its history”.

Page had taken over from founder Ray Kelvin, who resigned from his post last March following allegations from employees of “forced hugging”.

Ted Baker now expects to report full-year profits as low as £5m for the year. The company did not give an explanation for the stock mis-valuation.