Shares in Ted Baker lost more than a quarter of their value on Tuesday morning after the firm said profits would fall short of expectations.
In response to the profit warning, investors sold off shares wiping more than £150m from the company’s value.
The fashion house blamed “extremely difficult” trading conditions for the lower than expected earnings.
It is the latest setback for the firm after its founder, Ray Kelvin, left in March following harassment allegations.
The company complained of “unseasonable weather” across North America and a “highly promotional” sales environment as it said profits for the year ending January 2020 were likely to be between £50m and £60m.
The estimate falls short of the £70.9m it was expecting.
“The scale of today’s profit warning at Ted Baker will raise eyebrows… there will be questions around founder Ray Kelvin’s departure and the wider question of how to get Ted back on point,” analysts at Peel Hunt said in a note.
In March, Ted Baker reported its first drop in annual profits since 2008, as traditional bricks and mortar clothing stores struggled to compete with online retailers and British consumers tightened their purse strings.
Mr Kelvin, who had been chief executive since the company’s launch in 1988, resigned in March over claims he presided over a culture of “forced hugging”. He has denied all allegations of misconduct.
Lindsay Page, who replaced Mr Kelvin, told Reuters: “The markets that we trade in have been extremely challenging and that has also led to levels of discounting I think we’ve rarely seen before, particularly in the UK.”
“Several of our new product initiatives will commence imminently and we are confident in our collections for the coming season,” she said in a statement to the stock market.
Analysts at Liberum said the believed the “short-term and identifiable issues around product” were being addressed quickly but the “unpredictable trading backdrop across all markets appears to have less end in sight”.