Boohoo Shares Tumble After Allegations of Poor Pay, Factory Conditions

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LONDON — Shares in fast-fashion retailer Boohoo Group sank 23 percent on Monday to close at 2.97 pounds, following weekend media reports of sweatshop conditions at its suppliers’ factories in Leicester, the northern English city that is in local lockdown after a spike in COVID-19 cases.

The Sunday Times of London published a series of stories on working conditions in the city’s garment factories, having recently sent an undercover reporter to Jaswal Fashions, which was making clothing for Boohoo-owned brands Boohoo and Nasty Gal.

Boohoo Group is listed on the London Stock Exchange and has a market capitalization of 4.88 billion pounds. It has flourished during the coronavirus pandemic, selling cheap clothing and acquiring the online businesses of other British retail brands, most recently Warehouse and Oasis.

The Sunday Times reporter found that workers, many of them poor South Asian immigrants, were paid less than half of Britain’s minimum wage of 8.72 pounds per hour, while factories were run down and there were no COVID-19 social-distancing or hygiene measures.

Over the weekend, other media organizations, including Sky News and The Sunday Telegraph, published their own reports about conditions in the Leicester factories, and asked why the government has not done more to assist garment workers, and improve conditions on the factory floor.

In response to media allegations and lobbying from Labour Behind the Label, the not-for-profit co-operative that campaigns for workers’ rights in the clothing industry, the government has asked Britain’s National Crime Agency to look into modern slavery in Leicester’s clothing factories.

On Monday, Boohoo Group issued a lengthy statement to the London Stock Exchange, and said it remains committed to supporting U.K. manufacturing and is “determined to drive up standards” where required.

The company vowed 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.”

Boohoo argued 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.”

The fashion giant said the actions of a few “should not undermine the excellent work of many of our suppliers in the area, who provide good jobs and good working conditions.”

It remains to be seen whether anything will come of the National Crime Agency’s investigation into the Leicester sweatshops, or whether the government will act to improve working conditions in the city’s garment factories.

Early last year, the Parliament’s Environmental Audit Committee attempted to tackle the issue, publishing a report that highlighted the culture of throwaway fashion and unfavorable working conditions in some of the country’s apparel factories.

The report was result of an investigation that took place throughout 2018 based on information gathered from fast-fashion retailers such as Boohoo, Missguided and Asos, as well as from local designers and sustainability champions Phoebe English and Christopher Raeburn. Bigger luxury players such as Burberry and Stella McCartney also took part.

The parliamentary hearings addressed everything from factory working conditions to fabric sourcing, British consumers’ shopping habits and the industry’s waste issue.

The committee concluded that the solution lay in “clear economic incentives” from government to help factories improve conditions and stop wasting so much. The committee had wanted the government to enforce a “penny tax” on clothing. It argued that the tax could have raised up to 35 million pounds to put toward improved recycling and rewards for companies that prioritized working conditions and the environment.

The government failed to do anything with the report.

The city of Leicester will remain in lockdown until later this month. As reported, the government agency Public Health England said that after investigating hospitals, care homes, factories and other institutions it failed to find a specific source of the fresh COVID-19 outbreak in the city.

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