Fashion retailer Ted Baker has said it may have overstated the value of its stock by between £20m and £25m.
The mix-up comes at the end of a challenging year for the company.
In October, it issued its third profit warning in seven months and slumped to a £23million half-year loss.
TED shares fell 13% in early trading to below 339p, digging out a new 10-year low, before recovering to 389.4p as the morning progressed.
Following preliminary analysis, the business warned investors today (2 December) that it might have overstated inventory value by £20 million to £25 million, but believes the accountancy error will have no cash impact and will relate to "prior years". For an average listed business, this would be a bump in the road, but for Ted Baker, it's the latest in a line of a series of setbacks.
The inventory issue is "a huge blunder", felt Russ Mould at AJ Bell, and "suggests that the business hasn't got a grip on its numbers which is a bit worrying considering that new chief executive Lindsay Page used to be the finance director".
Alarmingly, law firm Freshfields Bruckhaus Deringer LLP has been appointed and independent accountants will also be drafted in to undertake a comprehensive review of the inventory overstatement.
The problems are the latest setback in a hard year for the firm.
Under a section titled "Significant Issues", the company's audit committee said it had "received and reviewed reports from management and the external auditors setting out the significant issues in relation to the financial statements for the period which related to the carrying value of inventory and the carrying value of retail fixed assets (being leasehold improvements and fixtures and fittings)".
'We keep our recommendation under review as there are further moving parts that may need consideration, which naturally lead to some additional questions'.
Kelvin was forced to leave Ted Baker - which he founded in 1988 - in March after he was embroiled in a scandal about inappropriate office behaviour following allegations of "forced hugs" and ear-kissing from staff.
"In our view, it is indicative to some degree of the very early-stage work that the new and highly regarded CFO, Rachel Osborne, is undertaking".