Boohoo shares now down 40% amid factory concerns

Shares of Manchester-based online fashion giant Boohoo Group plc fell another 15% on Wednesday as it moved to address concerns about working conditions and pay rates in factories that supply the firm.

The company’s share price has now fallen about 40% since Friday of last week.

Boohoo’s brands include prettylittlething.com and Nasty Gal as well as Oasis, Warehouse, MissPap, Karen Millen and Coast.

Boohoo said it is launching an immediate independent review of its UK supply chain, led by Alison Levitt QC, and “making an initial commitment to invest an incremental £10 million to eradicate supply chain malpractice.”

The company said it is also accelerating its independent third party supply chain review with ethical audit and compliance specialists Verisio and Bureau Veritas.

Boohoo said: “As soon as the group was made aware of the allegations of mistreatment of garment workers by our third party suppliers, as detailed in the 6 July announcement, an immediate investigation was launched.

“Our findings show some inaccuracies with last Sunday’s media report.

“The garments featured were not actually manufactured in Leicester, but in Morocco.

“Post production, the garments were shipped back to the UK by the supplier to be repackaged into compliant boxes for delivery to the group’s international distribution centre in Burnley.

“This was the process that was filmed at a premises formerly operated by Jaswal Fashions Limited.

“Jaswal Fashions Limited, contrary to the media report, is not and has never been a supplier for the group, and does not operate in the unit stated.

“Investigations over the last 72 hours have highlighted that the order from Nasty Gal was placed with Revolution Clothing Co Limited, who then instructed Morefray Limited to manufacture in Morocco and repackage the garments on their behalf in Leicester. 

“Our investigation to date has not found evidence of suppliers paying workers £3.50 per hour.

“However we have found other evidence of non-compliance with our code of conduct and the group has taken the decision to immediately terminate its relationship with both suppliers.”

Boohoo Group CEO John Lyttle said: “As a board we are deeply shocked by the recent allegations about the Leicester garment industry.

“We wish to reiterate how seriously we are taking these matters and we will not hesitate to terminate any relationships where non-compliance with our code of conduct is found.

“Our commitment to an incremental £10 million of investment demonstrates our resolve to enforce the highest standards of ethics, compliance and transparency for the benefit of all garment workers.

“We look forward to regularly updating our stakeholders as we move through this process.”

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