Boohoo share price drops as Leicester revelations rage


Boohoo share price drops as Leicester revelations rage

Some £1.6 billion was wiped off the value of online fashion retailer Boohoo after allegations were made which links it to a Leicester manufacturer. An undercover reporter who found work in the Jaswal Fashions factory uncovered a raft of issues including unsafe working conditions and workers not being paid minimum wage. It has been asserted in national media reports that Jaswal Fashions is a supplier to Boohoo’s Nasty Gal brand.

Boohoo has responded to the furore by saying: Where help and support for improvement is required, we have and will continue 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.

Market watchers say that the problems lie with the many subcontractors which principal suppliers farm work out to and that these small, often unregistered businesses flout UK employment law. Most are operated without regard for any regulations and have been lambasted for forcing staff to work during lockdown for as little as £3.50 per hour, without any regard to safety. It is said that the recent outbreak of Covid-19 in Leicester can be largely attributed to these unlawful operations.

It is understood that the Government is set to bring these employers to account. As these actions take place it does, of course, beg the question of how large fast fashion businesses can honestly expect to be able to sell garments to customers for as little as £5, when that sum not only includes fabric and trimmings but VAT and margin – in addition to the labour cost.

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