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/next-and-asos-drop-boohoo-amid-leicester-garment-factory-claims

The article has changed 7 times. There is an RSS feed of changes available.

Version 2 Version 3
Next and Asos drop Boohoo amid Leicester garment factory claims Next, Asos and Amazon drop Boohoo amid Leicester factory claims
(about 2 hours later)
Fashion retailers suspend label from websites after report on supplier working conditions Retailers suspend label from websites after report on supplier working conditions
Asos and Next have dropped the fast-fashion brand Boohoo after claims that some factories supplying its clothes paid less than minimum wage and failed to protect workers from coronavirus. Next, Asos and Amazon pulled all Boohoo clothing from sale as growing anger over workers’ pay and conditions at the company’s suppliers resulted in £1.5bn being wiped from the fast fashion brand’s value in two days.
The company had more than £1.5bn wiped off its stock market value since Monday in response to the allegations. Allegations that some factories in Leicester that sell clothes to Boohoo pay as little as £3.50 an hour and failed to protect workers from coronavirus emerged last week. On Tuesday, the three online retailers were joined by very.co.uk and Zalando, a European e-commerce giant that had €6.4bn sales in 2019, in removing Boohoo clothes from sale.
Asos and Next were joined by very.co.uk later on Tuesday, which issued a statement saying it had temporarily suspended sales. Next said the company acted last week in response to a report from the campaign group Labour Behind the Label, first reported in the Guardian, which detailed the allegations. “Next concluded there is a case for Boohoo Group to answer,” a spokesman said.
A spokesman for Next said the company had dropped Boohoo clothes from its websites last week in response to a report from the campaign group Labour Behind the Label which first detailed the allegations. “Next concluded there is a case for Boohoo Group to answer,” he said. An Amazon spokesperson said: “Selling partners are required to follow all applicable laws, regulations, and Amazon policies when selling in our store. We will be suspending the sale of the brands in question.”
Next said its approach was “based on trust” but that the allegations could not be ignored, and had launched its own investigation. It said it was “not pre-judging the outcome of this process and no final decision has been made” but that the items would be suspended in the meantime. The news will come as a further blow to Boohoo after it was forced to announce an investigation into claims that workers at one of its Leicester suppliers were being paid well below the hourly minimum wage of £8.72. Other factories are alleged to have forced people to work throughout lockdown despite some on site having symptoms of coronavirus.
Zalando, a Berlin-based online retailer which had €6.4bn sales in 2019, joined Next and Asos in dropping Boohoo, and all references to the company had been removed from their websites.
Zalando said: “We expect our partners to apply similar fundamental priorities and will distance ourselves from those who don’t.”Zalando said: “We expect our partners to apply similar fundamental priorities and will distance ourselves from those who don’t.”
It is understood that Asos’s move is a temporary measure while the company awaits the outcome of investigations into Boohoo’s supply chain. Zalando said it would consider restoring Boohoo items “only once all corrective actions have been satisfactorily addressed”. Boohoo, previously a £5bn company which also owns the Nasty Gal and PrettyLittleThing brands, has strongly denied any responsibility for the alleged bad practices of its Leicester suppliers. It told the Guardian on Friday: “We are working with our third-party compliance partner to further investigate the claims raised and are working with suppliers to ensure compliance.” It did not respond to a request for further comment.
The news will come as a further blow to Boohoo after it was forced to announce an investigation into claims that workers at one of its Leicester suppliers were being paid as little as £3.50 an hour. Other factories are alleged to have forced people to work throughout lockdown despite others on site having symptoms of coronavirus. Shares in the company fell almost 12% on Tuesday to 261.4p, their lowest level in nearly three months. That knocked £440m off its market capitalisation, on top of the £1.1bn wiped off its value on Monday – a drop of almost a third.
The claims have revived long-held concerns over working conditions in Leicester’s garment industry, where around 1,000 factories and small workshops make clothes, mostly for UK fast-fashion brands. An estimated 75%–80% of clothes produced in the city are for Boohoo.The claims have revived long-held concerns over working conditions in Leicester’s garment industry, where around 1,000 factories and small workshops make clothes, mostly for UK fast-fashion brands. An estimated 75%–80% of clothes produced in the city are for Boohoo.
Boohoo, which also owns the Nasty Gal and PrettyLittleThing brands, has strongly denied any responsibility for the alleged bad practices of its Leicester suppliers. It told the Guardian on Friday: “We are working with our third-party compliance partner to further investigate the claims raised and are working with suppliers to ensure compliance.” The online retailers said that their relationships with the company in future would depend on the results of investigations and how the company responded to any findings.
On Tuesday, Umar Kamani, the son of the company’s billionaire owner, Mahmud Kamani, and founder of PrettyLittleThing with his brother Adam, tweeted “the truth will always come out” but then deleted the message. Next said its approach was “based on trust” but that the allegations could not be ignored, and had launched its own investigation. It said it was “not pre-judging the outcome of this process and no final decision has been made” but that Boohoo items would be suspended in the meantime.
Zalando said in a statement: “In response to the allegations against Boohoo regarding worker rights during Covid-19 in factories in Leicester, Zalando has made the decision to delist all products by Boohoo Group and subsidiaries and pause all new business with Boohoo effective 7 July.” It is understood that Amazon and Asos have taken temporary measures while they await the outcome of investigations into Boohoo’s supply chain.
It added that “only once all 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”. Zalando said it would consider restoring Boohoo items “only once all corrective actions have been satisfactorily addressed”. Very said its move was temporary and that it would “await the outcome of Boohoo’s investigation and its subsequent operational response”.
A spokesperson for The Very Group said: “We have temporarily suspended the sale of brands operated by Boohoo Group while the company conducts its investigation” except those where stock predated Boohoo’s acquisition of the brands, including Oasis and Warehouse. The spokesperson added: “We await the outcome of Boohoo’s investigation and its subsequent operational response.” The news is “part of the reputational fallout” for Boohoo and its brands, said Aneesha Sherman, an industry analyst who estimated that revenue from other sellers amounted to 7% of the company’s income but was important as a marketing platform and signal of status.
Boohoo did not immediately respond to a request for comment. She said there would be concerns that social media influencers who are the company’s main marketing route to its young customer base would start to desert it. “I expect to see them distancing themselves in the next few days,” Sherman said.
Former The Only Way Is Essex cast member Vas Morgan and model Jayde Pierce, moved to distance themselves from their former work for Boohoo on Tuesday. They have around 1.5m Instagram followers between them.
Others, including former Love Island star Molly Mae O’Hagan, viewed by industry sources as Boohoo’s most valuable endorsement, declined to comment when contacted by the Guardian.
Investors believe the company will ultimately right itself but are concerned in the short term, Sherman said. “There’s a lot more consideration of ESG [ethical, social and governance issues] than there was five years ago.”
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.
On Tuesday, Umar Kamani, the son of the company’s billionaire owner, Mahmud Kamani, and founder of PrettyLittleThing with his brother Adam, tweeted “the truth will always come out” but then deleted the message. Amy Reddish, head of brand at PrettyLittleThing, posted an Instagram story with the text: “Don’t believe everything you hear or read.”
The company’s customer service replies on social media posts appeared to be struggling to catch up with the situation, meanwhile, with comments on Boohoo Instagram posts raising concerns drawing what appeared to be automated replies.
One message calling Boohoo “disgraceful” and criticising practices at its suppliers drew the response: “Please DM us in regards to this and I’ll get this looked into for you! :)”