This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2020/jul/07/boohoo-shares-concern-factory-conditions

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Boohoo shares plunge amid concern over factory conditions Boohoo shareholders demand answers after shares plunge by a third
(about 7 hours later)
More than £1.5bn wiped off online fashion retailer’s stock market value in just two days More than £1.5bn wiped off online fashion retailer’s market value in two days 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. Shareholders in Boohoo are seeking answers from the company over conditions for workers supplying its garments after the online fashion specialist’s shares plunged more than £1.5bn in two days.
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 has lost nearly a third of its value since Friday afternoon after 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 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’s sales have been booming during the coronavirus lockdown as consumers shifted to buying clothes online, but the company’s shares fell by 12% on Tuesday, extending the previous day’s fall.
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. Jupiter Asset Management, which owns a near 10% stake in Boohoo via its recently acquired Merian Global Investments arm, said it had been “actively engaging” with Boohoo over issues of supply chain management. “We have been given strong assurances by management that any suppliers found to be in breach of the company’s strict code of conduct will be terminated immediately and we will continue to engage with the firm regarding this situation,” Jupiter said in a statement.
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. Invesco, another of the company’s three biggest shareholders, said it would be investigating the “circumstances and validity” of reports that staff at one Leicester factory supplying Boohoo were paid as little as £3.50 an hour and were working without proper equipment to guard against Covid-19.
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. A spokesperson said: “While we don’t generally comment on rumours in the press about the companies we invest in, we take issues of company governance very seriously and will be investigating these reported concerns.”
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. Matthew Earl, managing partner of specialist hedge fund ShadowFall, which holds a short position in Boohoo – a form of bet against its share price, said it viewed the revelations as further evidence supporting concerns raised earlier this year. The fund issued a 54-page report highlighting governance issues at Boohoo in May. “The market finally seems to be coming round to our view that boohoo’s margins may not be sustainable if greater scrutiny continues to be applied,” Earl said.
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. Boohoo, which owns the Nasty Gal and Pretty Little Thing brands, said it would not hesitate to terminate its relationship with any suppliers found in breach of its code of conduct.
A director of the company that leased the premises from Jaswal Fashions has not responded to requests for comment from the Guardian. 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.
The Gangmasters and Labour Abuse Authority (GLAA) said on Tuesday it had joined with Leicestershire police, Leicester city council, the National Crime Agency, the Health and Safety Executive, Leicestershire fire and rescue and Immigration Enforcement to carry out inspections of garment factories in the city over the past week.
It said further visits would be carried out in the coming weeks but it had found no requirement for enforcement action so far.
GLAA head of enforcement, Ian Waterfield, said: “Allegations of labour exploitation are something we take extremely seriously and we will continue to take appropriate action to safeguard potentially vulnerable workers.”
The Sunday Times reported that alleged staff were working in hot and cramped conditions, without sufficient protective equipment and were paid rates below the minimum wage.
A company named as the supplier has since strenuously denied its involvement, saying it no longer works from the factory and no longer supplies Boohoo.
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.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.