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LONDON (Reuters) – Online fashion retailer Boohoo has commissioned an independent review of its supply chain in Britain focused on areas including compliance with minimum wages and coronavirus rules after a damaging media report about working conditions.
Boohoo (L:BOOH) shares have lost about a third of their value since The Sunday Times reported that workers in a factory in Leicester, central England, who were making clothes destined for Boohoo were paid as little as 3.50 pounds ($4.39) an hour.
Meanwhile, Labour Behind the Label, which campaigns for workers’ right, said last week it had received reports of “workers being forced to come into work while sick with COVID-19, workers wishing to isolate being denied pay, (and) factories operating illegally throughout lockdown”.
Factory conditions in Asia of suppliers to British fast fashion retailers have been in the spotlight for more than a decade, but in recent years the exploitation of low-paid workers in factories in Britain has also come to light.
Shares in Boohoo were down 10% at 0723 GMT on Wednesday after retailers Next (L:NXT), Zalando (DE:ZALG) and Amazon (O:AMZN) delisted its products from their websites.
“We are deeply shocked by the recent allegations about the Leicester garment industry,” CEO John Lyttle said on Wednesday after announcing the review.
This will focus on supplier compliance with minimum wage regulations, compliance with COVID-19 regulations, working hours and record keeping and right to work documentation and contracts of employment, Boohoo said.
The review is being led by senior lawyer Alison Levitt with the board represented by Brian Small, senior independent director of Boohoo, which sells own-brand clothing, shoes and accessories targeted at 16 to 40-year-olds.
“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,” said Lyttle.
Boohoo has grown rapidly since it was founded by Mahmud Kamani and Carol Kane in Manchester in 2006 and at Friday’s market close its market value was nearly 5 billion pounds, more than double that of Marks & Spencer (L:MKS), Britain’s largest clothing retailer by sales value.
The firm said it was also accelerating its independent third party supply chain review with ethical audit and compliance specialists, Verisio and Bureau Veritas, and would invest 10 million pounds to tackle the problem.
($1 = 0.7972 pounds)
