25th Sep 2020 08:31
(Alliance News) - Online clothing retailer Boohoo Group PLC on Friday laid out a series of changes it plans to make after an independent review found "significant and clearly unacceptable issues" in its supply chain.
The review was launched by Boohoo in July following claims it sold clothes made in factories where staff were paid less than the minimum wage.
Shares in Boohoo were up 16% at 375.85 pence each in London on Friday morning. Year-to-date the stock has risen 23% in value.
The review identified "many failings" in the Leicester supply chain and recommended improvements to Boohoo's corporate governance, compliance and monitoring processes. Alison Levitt, who was appointed to run the review, was satisfied that Boohoo did not deliberately allow poor conditions and low pay to exist within its supply chain, however.
Levitt is "confident that the adaptations which Boohoo should make involve a relatively easily-achieved realignment of its priorities and governance systems and that the board should not feel discouraged. It has already made a significant start on putting things right."
Following the review and its recommendations, Boohoo said it will enhance corporate governance and oversight, and will appoint two new non-executive directors to strengthen the board. It plans for one of these director roles to be filled by someone experienced in dealing with environmental, social and governance matters.
The company also has recently recently constituted an additional board committee, the risk committee, to enable better identification and closer monitoring of the risks. Reporting into the risk committee will be a new supply chain compliance committee, who will ensure supply chain compliance in relation to Covid-19.
The retailer also has taken on the review recommendations to strengthen its product sourcing team and has recently appointed a new group director of responsible sourcing - who joins from a "major global apparel retailer".
In addition, Manchester-based Boohoo plans to consolidate its approved supplier list, invite new suppliers and extend independent audit of its supply chain.
"Over the next 12 months, we will implement an electronic audit programme, which is currently in development to monitor status and capacity across our supply chain," the company said.
Boohoo will work more closely with suppliers to ensure they are able to "manage a more consistent and predictable flow of orders".
Boohoo Chief Executive John Lyttle said: "Today we publish Levitt's independent review in full. This has identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and compliance. As a result, the group is implementing necessary enhancements to its supplier audit and compliance procedures, and the board's oversight of these matters will increase significantly."
By Tapan Panchal; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Boohoo