Ted Baker
Shoppers walk past a Ted Baker store on Regents Street in London, Britain December 17, 2018 Image Credit: Reuters

The founder and chief executive of the British fashion chain Ted Baker resigned Monday after current and former employees accused him of inappropriate behavior.

Employees said the executive, Ray Kelvin, would regularly try to massage people in the office, insist on long hugs with staff members and ask employees for sex, according to a petition that started circulating in December. The petition also said that the company's human resources department had ignored complaints about the behavior.

"Harassment at Ted Baker is well documented but willfully ignored by those in charge," wrote the authors of the petition, which called for the company to adopt procedures that would allow workers to report harassment to an independent, external organization.

Kelvin denied the allegations but agreed Monday to resign immediately as chief executive and director of Ted Baker, the company said. He had taken a voluntary leave of absence in December.

"As founder and CEO, we are grateful for his tireless energy and vision," David Bernstein, the executive chairman, said in a statement. "However, in light of the allegations made against him, Ray has decided that it is in the best interests of the company for him to resign so that the business can move forward under new leadership."

Lindsay Page, a longtime executive who was named acting chief executive in December, will continue in that role, the company said.

Shares in Ted Baker, which had sunk immediately after the allegations were made public in December, dropped after the news of Kelvin's resignation but quickly recovered, and were up 2.7 percent in morning trading.

"We are determined to learn lessons from what has happened and from what our employees have told us and to ensure that, while the many positive and unique aspects of Ted's culture are maintained, appropriate changes are made," Bernstein added.

Kelvin named his business, one of Britain's best-known fashion brands, after a fictitious alter ego, and the "hug culture" that he fostered in his office was well known. After the allegations were made public in December, the company said: "Ray greets many people he meets with a hug - be it a shareholder, investor, supplier, partner, customer or colleague. Hugs have become part of Ted Baker's culture but are absolutely not insisted upon."

Kelvin was also known for attempting to never show his face in public and often appeared in photographs with an object held in front of his face.

The accusations against Kelvin emerged just months after Philip Green, another wealthy British retail tycoon, came under the spotlight for using nondisclosure agreements to silence former employees who had accused him of sexual harassment and racist abuse.

The allegations against Kelvin, and his subsequent leave of absence, added to problems facing the Ted Baker brand. Shares had been volatile after the company reported a drop in profit for the first half of 2018 and said that the remainder of the year would be challenging. It issued another profit warning at the end of February.

The company said Kelvin would not be receiving any salary or benefit payments related to his resignation.

The company was founded in 1988 and has 544 stores around the world.