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Boohoo shares slump as PwC walks away as auditor

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3-min read
A woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo on display in this illustration taken September 30, 2020. REUTERS/Dado Ruvic/Illustration
A woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo on display in this illustration taken September 30, 2020. Photo: REUTERS/Dado Ruvic/Illustration

Embattled fast fashion retailer Boohoo (BOO.L) has confirmed it is hunting for a new auditor after PwC said it would not to continue working with the company when its current contract is up.

Boohoo said in a statement on Monday that it had “recently launched a competitive tender process for the Group's audit”. PwC, which has been Boohoo’s auditor since 2014, would not be bidding for the job, Boohoo said.

Shares in Boohoo fell 11% on Monday morning.

Boohoo shares dropped after confirming PwC would be resigning. Photo: Yahoo Finance UK
Boohoo shares dropped after confirming PwC would be resigning. Photo: Yahoo Finance UK

The Boohoo statement follows a story in the Financial Times on Friday claiming PwC was resigning as auditor over reputation concerns.

PwC declined to comment.

Boohoo said on Monday that PwC was “still the Group's auditor at this time” and had “signed an unqualified opinion on the Group's 2020 Financial Statements.” The company said it would update investors on the hunt for a new auditor when appropriate.

READ MORE: Boohoo's found 'many failings' in working conditions and low pay in Leicester supply chain

“Appointing a new auditor will not be a walk in the park,” Greg Lawless and Clive Black, retail analysts at Shore Capital, wrote in an investment note on Monday.

Watch: Boohoo 'did not move quickly enough' on Leicester supply chain malpractice

Boohoo has been embroiled in a scandal over conditions in its supply chain. Investigation by the Guardian and the Sunday Times earlier this year claimed to find workers in Leicester factories that supplied Boohoo being paid below minimum wage and working in poor conditions.

Boohoo commissioned an independent review by Alison Levitt QC that found “many failings in the Leicester supply chain.” It recommended “improvements to boohoo's related corporate governance, compliance and monitoring processes.”

READ MORE: Fixing Boohoo could cost £20m as stock continues to slide

More recently, a BBC investigation claimed Boohoo worked with suppliers involved in VAT fraud and money laundering. Boohoo, which said it was unaware of the claims, ended its relationship with one supplier after the report.

The Sunday Times this weekend reported that the National Crime Agency was investigating Boohoo’s suppliers over VAT fraud and money laundering allegation.

Black and Lawless said any new auditor would “want to understand what has changed/is changing at the company” in the wake of Levitt’s review and recent press report.

READ MORE: Boohoo sales jump 45% despite Leicester supply chain scandal

Lawless and Black said the string of bad headlines about Boohoo and the loss of its auditor “poses a challenge for institutional and wealth managers”, many of which promise to meet corporate social responsibility and governance standards with their investments.

Boohoo’s share price is currently 7% below January’s levels and more than 30% below a peak reached in June.

Watch: Why tax rises may be inevitable in Britain