Shares of Manchester-based online fashion giant Boohoo Group plc fell about 25% on Monday after a newspaper report said workers in a Leicester factory making clothes destined for Boohoo were being paid as little as £3.50 an hour.
The report claimed the factory — which displayed the sign Jaswal Fashions — was also operating last week during a local coronavirus lockdown without additional hygiene or social distancing measures in place.
Boohoo said on Monday it is trying to establish the identity of this company.
Last week, Boohoo was accused of risking the spread of coronavirus following allegations that factories in Leicester that supply Boohoo told staff to come into work during lockdown despite being sick.
Labour Behind the Label, a garment workers’ rights group, produced a report called “Report: Boohoo & COVID-19: The people behind the profit.”
Boohoo is by far the largest company on London’s AIM market with a stock market value of almost £5 billion.
Boohoo said on June 26 it intends to implement a “management incentive plan” that will pay out up to a maximum of £150 million to a small group of executives if the stock market value of the firm rises by 66% over a three-year performance scheme period.
In a stock exchange statement on Monday, Boohoo said: “Boohoo remains committed to supporting UK manufacturing and is determined to drive up standards where this is required.
“Where help and support for improvement is required, we have and will continue to provide it, to ensure that everyone working to produce clothing in our supply chain is properly remunerated, fairly treated and safe at work.
“We will not hesitate to immediately terminate relationships with any supplier who is found not to be acting within both the letter and spirit of our supplier code of conduct.
“This includes very clear expectations on transparency about second tier suppliers.
“We are grateful to The Sunday Times for highlighting the conditions at Jaswal Fashions, which, if as observed and reported by the undercover reporter, are totally unacceptable and fall woefully short of any standards acceptable in any workplace.
“Our early investigations have revealed that Jaswal Fashions is not a declared supplier and is also no longer trading as a garment manufacturer.
“It therefore appears that a different company is using Jaswal’s former premises and we are currently trying to establish the identity of this company.
“We are taking immediate action to thoroughly investigate how our garments were in their hands, will ensure that our suppliers immediately cease working with this company, and we will urgently review our relationship with any suppliers who have sub-contracted work to the manufacturer in question.
“We are keen and willing to work with local officials to raise standards because we are absolutely committed to eradicating any instance of non-compliance and to ensuring that the actions of a few do not continue to undermine the excellent work of many of our suppliers in the area, who provide good jobs and good working conditions.”