Retailers Pulls Boohoo Clothing Over Labor Abuse Concerns, Plus Investor Drops The Brand’s Shares Over Garment Worker Allegations

LONDON, UNITED KINGDOM — It was reported that retailers pulled Boohoo clothing over labor abuse concerns.

Next Plc has temporarily stopped selling Boohoo and PrettyLittleThing fashion on its website amid concerns over the exploitation of labor, according to BoF.

Boohoo Group Plc “has a case to answer” following reports that factories supplying the online retailer pay workers less than minimum wage and flouted coronavirus lockdown rules, Next spokesman Alistair Mackinnon-Musson said.

Next removed the products from its website in the beginning of July. The company has begun its own investigation, Mackinnon-Musson said.

“Next is not pre-judging the outcome of this process and no final decision has been made,” he said. “However, while there is a case to answer, these labels will remain suspended from all Next websites.”

Other online retailers — including Asos Plc and Very Group Ltd. in the U.K. and Zalando SA, a German fashion website — have also temporarily suspended the sale of Boohoo products. Sarah Thomas, a spokeswoman for Zalando, said that only once “corrective actions have been satisfactorily addressed by Boohoo, can a conversation be revisited to discuss the commercial relationship between Zalando and the Boohoo group moving forward.”

Boohoo said it has launched its own investigation and will review its supply chain in Leicester, England, the site of a recent flareup in coronavirus infections. It has pledged to immediately terminate contracts with any suppliers who have breached its code of conduct.

Shares in Boohoo have plunged on concern it could face a formal investigation under Britain’s Modern Slavery Act. The UK’s National Crime Agency said that it had visited a number of business premises in the Leicester area “to assess concerns of modern slavery and human trafficking.” The agency didn’t identify the companies involved.

Boohoo shares have gained more than 70 percent in the past year. The company spends millions on endorsements from social media influencers and reality TV stars. PrettyLittleThing is one of the fashion brands on its site.

UPDATE 2:

Following the above report, Investor Standard Life Aberdeen said it had sold its shares in fashion retailer Boohoo, describing the company’s response to allegations of worker abuse at supplier factories as “inadequate.”

SLA, previously one of Boohoo‘s biggest investors, has sold most of its stock, a spokesman for the asset manager said, confirming an earlier report in the Financial Times.

Boohoo shares have plunged after The Sunday Times reported that workers in a factory in Leicester, central England, who were making clothes destined for Boohoo, were paid as little as £3.50 ($4.39) an hour.

Boohoo said it would commission an independent review of its supply chain in Britain.

Lesley Duncan, deputy head of UK equities at SLA unit Aberdeen Standard Investments, said the firm had invested in Boohoo since its listing, but said there had been insufficient progress improve working conditions.

The response was “inadequate in scope, timeliness and gravity,” Duncan said, adding: “We strive to use our influence as significant investors to achieve progress.”

“In instances where our standards have not been met, divestment is both appropriate as responsible stewards of our clients’ capital and aligned to our goal of investing for better outcomes.”

UPDATE 3:

Boohoo Group Plc said it suspended business with some suppliers following reports that clothing sold by the online retailer may be made in factories paying less than minimum wage.

Shares of the clothier fell as much as 17 percent in afternoon trading in London after the Guardian cited auditors’ findings that more than a dozen UK suppliers may be paying substandard wages. The newspaper said at least 18 businesses, eight of which denied some or all of the claims, couldn’t prove they were compliant.

The company’s own investigations “have highlighted similar issues” at an unspecified number of factories, a Boohoo spokesman said in a statement, and the company has suspended business with those firms.

Boohoo, which owns the Nasty Gal label, said it’s sharing its findings with organisations such as Slave Free Alliance to ensure workers are treated fairly and paid appropriately.

Photos Credit: Courtesy

Source: BoF