8th Jul 2020 10:28
(Alliance News) - Boohoo Group PLC on Wednesday said it has launched an independent review of its UK supply chain as the fast-fashion retailer grapples with claims it sold clothes made in factories where staff were paid less than the minimum wage and worked in poor conditions.
Boohoo on Wednesday again distanced itself from Jaswal Fashions Ltd however, a company at the centre of the allegations, and added that while it has seen "non-compliance" with its code of conduct, it has not seen evidence of its suppliers paying workers GBP3.50 per hour.
Boohoo shares lost another 20% on Wednesday morning, trading at 209.70 pence each. So far this week, the AIM stock is down 63%.
"As a board, we are shocked and appalled by the recent allegations that have been made and we are committed to doing everything in our power to rebuild the reputation of the textile manufacturing industry in Leicester. We want to ensure that the actions of a few do not continue to undermine the excellent work of many suppliers in the area, who succeed in providing good jobs and good working conditions," Boohoo said.
Alison Levitt, a lawyer, will head up a probe an independent probe "of our UK supply chain", Boohoo said.
It has also injected GBP10 million "to eradicate supply chain malpractice". Meanwhile, compliance specialists Verisio, based in Peterborough and Paris-headquartered Bureau Veritas will review Boohoo's third-party supply chain.
Boohoo added: "We take extremely seriously all allegations of malpractice, poor working conditions, and underpayment of workers. The group will not tolerate any incidence of non-compliance with its code of conduct or any mistreatment of workers, and will not hesitate to terminate relationships with any supplier who does not comply.
"We would welcome the opportunity to work with the home secretary and the local authority on any future investigations to help eliminate any instances of labour malpractice in Leicester."
The Sunday Times newspaper reported allegations that workers in Leicester's Jaswal Fashions Ltd factory making clothes for Boohoo brand Nasty Gal were being paid as little as GBP3.50 an hour and operating without social distancing measures in place.
The affordable fashion retailer responded on Monday by saying that its early investigations revealed that Jaswal Fashions is not a declared supplier and is also no longer trading as a garment manufacturer.
It stated it believes a different company is using Jaswal's former premises, adding that its currently trying to establish the identity of this company.
Boohoo reaffirmed this on Wednesday, adding: "Our findings show some inaccuracies with last Sunday's media report. The garments featured were not actually manufactured in Leicester, but in Morocco. Post-production, the garments were shipped back to the UK by the supplier to be repackaged into compliant boxes for delivery to the group's international distribution centre in Burnley. This was the process that was filmed at a premises formerly operated by Jaswal Fashions.
"Jaswal Fashions, contrary to the media report, is not and has never been a supplier for the group, and does not operate in the unit stated. Investigations over the last 72 hours have highlighted that the order from Nasty Gal was placed with Revolution Clothing Co Ltd, who then instructed Morefray Ltd to manufacture in Morocco and repackage the garments on their behalf in Leicester."
Boohoo said there was no evidence of suppliers paying workers GBP3.50 per hour but conceded it has found "other evidence of non-compliance with our code of conduct".
"The group has taken the decision to immediately terminate its relationship with both suppliers," Boohoo said.
On Tuesday, Next PLC and ASOS PLC said they have dropped Boohoo clothing from their websites. Other online retailers, including Zalando and Very.co.uk, have also temporarily suspended the sale of Boohoo items.
By Eric Cunha; [email protected]
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