Boohoo Group Plc said it has stopped working with a UK supplier after allegations that staff at the warehouse were forced to work overtime.
The move came out Friday after a BBC documentary entitled “Boohoo’s Broken Promises” accused the fast-fashion chain of putting undue pressure on garment suppliers. Boohoo hasn’t reneged on any of its commitments to clean up its supply chain, CEO John Lyttle wrote in a letter to Philip Dunne, chair of the Environmental Audit Committee, sent in December and published Friday.
Boohoo is still recovering from a labour supply scandal in 2020, when some of the company’s UK garment suppliers were paying less than minimum wage and skimping on safety precautions at factories in Leicester amid a flareup of Covid. Those revelations sparked an overhaul of governance, with Boohoo cutting more than 400 companies from its supplier network and carrying out an independent review of the business.
Shares in the company fell as much as 4.6 percent Friday. They have lost more than 90 percent of their value since a peak in 2020.
CEO Lyttle added that efforts by Boohoo to drive down prices from suppliers is a temporary measure given inflation easing, not an ongoing program of regular price reductions. The BBC documentary, which aired in November, featured footage from a reporter working undercover at Boohoo’s head office in Manchester as well as footage from inside the supplier warehouse.
The online retailer, which owns brands including NastyGal and PrettyLittleThing, said its price negotiations with suppliers reflect declining input costs after a period of high inflation.
“It is only correct that our suppliers should reflect that in their pricing,” wrote Lyttle.
Separately, Boohoo is closing its warehouse at Thurmaston Lane in Leicester, putting under 100 employees at risk of redundancy. The CEO said the decision was taken after investing in a distribution center in Sheffield and opening a new facility in the US.
Boohoo opened the Thurmaston Lane warehouse only two years ago to much fanfare as it sought to offer an example by bringing some manufacturing in-house in Leicester and represent best practices, combating some of the criticism the company had received.
Earlier this month BBC reported that Boohoo had labelled items of clothing made in South Asia as “Made in the UK,” saying workers at the Thurmaston Lane facility had removed original labels from plain t-shirts and hooded jumpers. Boohoo told the news agency this was due to a misinterpretation of labelling rules. CEO Lyttle didn’t comment on the labels in his letter to the EAC.
Dunne, the chair of the committee, said Friday the documentary was “troubling” and the mislabelling of garments is “concerning.” “I trust that the company is taking urgent steps to ensure that correct labeling practices are in place across its UK operations,” he wrote.
The retailer, which sells £12 ($15) mini-dresses and £6 T-shirts, has had a difficult few years as shoppers return to stores after the Covid pandemic and upstart e-commerce rival Shein has gained market share. This week Chief financial officer Shaun McCabe stepped down with immediate effect, to be replaced by former CFO of Betfair and Zoopla, Stephen Morana.
By Katie Linsell
Boohoo Considers Closing UK Factory Set Up to Improve Workers’ Treatment
The struggling online retailer is consulting with up to 100 workers at the site two years after it was opened to great fanfare with the intention of using it for “supplier learning and development,” creating 170 jobs.