Yahoo Finance Boohoo shares plunge amid concern over factory conditions
The value of the online fashion retailer Boohoo has plunged by more than £1.5bn in two days, after revelations about conditions endured by the workers that supply its garments.
Boohoo’s sales have been booming during the coronavirus lockdown as consumers shifted to buying clothes online, but its shares fell by 14% in early trading on Tuesday, extending the previous day’s falls.
The company is now worth more than a third less than it was on Friday afternoon, before allegations about its supply chain wiped £1.5bn off its stock market value.
Boohoo said on Monday it was investigating claims that staff at one of its Leicester factories were paid as little as £3.50 an hour and were working without proper equipment to guard against Covid-19.
The firm, which owns the Nasty Gal and Pretty Little Thing brands, said it would not hesitate to terminate its relationship with any suppliers that were found in breach of its code of conduct.
But the case has ignited broader concerns about working conditions in hundreds of small warehouse factories in Leicester’s garment industry, which supplies high street fashion brands.
Jaswal Fashions was the supplier initially named in a Sunday Times report that alleged staff were working in hot and cramped conditions, without sufficient protective equipment and were paid rates below the minimum wage.
The company has strenuously denied its involvement, saying it no longer works from the factory on Leicester’s Gas Street, no longer supplies Boohoo, and has leased the premises to another firm.
A director of the company that leased the premises from Jaswal Fashions has not responded to requests for comment from the Guardian.
Concerns about Boohoo’s supply chain emerged less than a month after the company announced a bonus plan worth up to £150m for its bosses.
