Reshuffle lays bare ‘accounting issues’

The majority owner of Agent Provocateur has hired KPMG to investigate various “accounting issues” that have been uncovered during a boardroom reshuffle at the lingerie retailer.

3i, the private equity group, has instructured KPMG to review how the retailer’s filed accounts were put together and how issues, thought to include an overstatement of profits, came about. The review will also involve analysing the work carried out by PwC, the auditor to Agent Provocateur.

The news came as it emerged that Chris Woodhouse, non-executive chairman of Agent Provocateur, had stepped down and handed over the reins to Ian Lobley, a partner at 3i. Mr Woodhouse has had to play a more active role in the running of the group since February when its chief executive Garry Hogarth left after a review of the business by Goldman Sachs. Keith Wilks, finance director, left Agent Provocateur in September.

Fabrizio Malverdi, former boss at John Galliano, has since been hired as the new chief executive. It is understood that Mr Woodhouse, who has a full-time role as the chief executive of the RAC breakdown recovery service, stepped aside as he does not have enough time to commit to helping the retailer revive its performance.

One source said: “3i is pretty annoyed about the whole situation which has also resulted in them having to put more funding [into Agent Provocateur] and they will be asking people, including the auditors, a lot of difficult questions about what has happened here.”

3i revealed in its accounts last month that Agent Provocateur had been impacted by volatility and declining luxury spend in a number of its key markets. It added that this downturn had been aggravated by the “inconsistent execution of its recent store expansion programme and the discovery of accounting issues”. These challenges led to 3i reducing the value of its 80 per cent stake in Agent Provocateur by £39 million.

In its last filed accounts, Agent Provocateur’s sales rose 16 per cent to £61.7 million but pre-tax profits fell by more than a quarter to £4.6 million.