Boohoo Group Plc announced it has severed ties with a UK supplier following allegations of mandatory overtime for warehouse staff.
The decision was made public on Friday following a BBC documentary titled “Boohoo’s Broken Promises,” which accused the fast-fashion retailer of exerting undue pressure on garment suppliers. Boohoo’s CEO, John Lyttle, assured Philip Dunne, chair of the Environmental Audit Committee, in a letter sent in December and released on Friday, that the company remains committed to rectifying issues within its supply chain.
Boohoo continues to grapple with the fallout from a labor supply scandal in 2020, where some UK garment suppliers were found to be paying below minimum wage and compromising safety measures in Leicester factories during the height of the Covid outbreak. This led to a comprehensive overhaul of governance, with Boohoo terminating contracts with over 400 companies from its supplier network and commissioning an independent review of its operations.
Shares in the company dropped as much as 4.6 percent on Friday, having declined over 90 percent since their peak in 2020.
CEO Lyttle clarified that Boohoo’s efforts to negotiate lower prices from suppliers are temporary and linked to easing inflation, not a continuous strategy of cost reduction. The BBC documentary, aired in November, included undercover footage from a reporter at Boohoo’s Manchester headquarters and the supplier warehouse.
The online retailer, which encompasses brands like NastyGal and PrettyLittleThing, stated that negotiations with suppliers reflect reduced input costs following a period of inflation.
Separately, Boohoo announced the closure of its warehouse at Thurmaston Lane in Leicester, putting fewer than 100 jobs at risk. Lyttle attributed the decision to investments in a distribution center in Sheffield and the opening of a new facility in the US.
The Thurmaston Lane warehouse, inaugurated just two years ago with great acclaim, aimed to set an example by bringing some manufacturing in-house in Leicester and adhering to best practices, countering criticisms leveled against the company.
Earlier this month, the BBC reported that Boohoo had labelled garments made in South Asia as “Made in the UK,” alleging that workers at the Thurmaston Lane facility had removed original labels from plain t-shirts and hooded jumpers. Boohoo attributed this to a misunderstanding of labeling regulations. Lyttle did not address the labeling issue in his letter to the EAC.
Dunne expressed concern over the documentary’s revelations, highlighting the mislabeling of garments as a troubling issue. He urged Boohoo to swiftly implement correct labeling practices across its UK operations.
Amid a challenging retail landscape post-pandemic, marked by a resurgence in in-store shopping and increased competition from e-commerce rival Shein, Boohoo faces ongoing scrutiny. This week, Chief Financial Officer Shaun McCabe resigned with immediate effect, succeeded by Stephen Morana, former CFO of Betfair and Zoopla.