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Boohoo instigates independent review of UK supply chain as Next, Asos ditch the brand over Leicester scandal, share price loses £1bn

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Boohoo: investigating
Boohoo: investigating
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Boohoo launched immediate independent enquiry as brands stop stocking its goods – but doubt emerges over whether errant supplier was working for the company

Fashion brand Boohoo has pledged to conduct an ‘immediate and independent’ review of its entire UK supply chain as it battles to stem the flow of big name retailers refusing to stock its goods after an undercover reporter from The Sunday Times found poor working conditions at a supplier making clothing destined for Boohoo Group brands.

 

The reporter spent time working at a company that appeared to be trading as Jaswal Fashions in Leicester and found that workers were being paid £3.50 an hour, well below the minimum hourly wage of £8.72 for workers aged 25 or older, while also working in conditions that did not permit social distancing at the height of the Covid-19 lockdown.

 

The news prompted Next to drop Boohoo clothes from its websites last week, while Asos and Zalando followed suit on Tuesday.

 

However, the group is now announced an immediate independent review of our UK supply chain, led by Alison Levitt QC. It is also making an initial commitment to invest an incremental £10 million to eradicate supply chain malpractice, as well as accelerating our independent third party supply chain review with ethical audit and compliance specialists, Verisio and Bureau Veritas.

 

In a statement the company said: “We take extremely seriously all allegations of malpractice, poor working conditions, and underpayment of workers. The Group will not tolerate any incidence of non-compliance with its Code of Conduct or any mistreatment of workers and will not hesitate to terminate relationships with any supplier who does not comply. We would welcome the opportunity to work with the Home Secretary and the local authority on any future investigations to help eliminate any instances of labour malpractice in Leicester.”

 

Scope and timeline for review

The objective of the review is to identify areas of risk and non-compliance, take action to strengthen future compliance and to provide stakeholders with comfort that similar allegations will not recur in the future, says the company.

 

The review will be led by Alison Levitt QC with boohoo board representation from Brian Small, the Group’s Deputy Chairman and Senior Independent Director. It will focus on reviewing our UK supply chain, prioritising supplier compliance with minimum wage regulation, compliance with COVID-19 regulations, working hours and record keeping, as well as right to work documentation and contracts of employment.

 

As part of this review, the Group has retained additional services of compliance specialists, Bureau Veritas. This appointment will provide additional capacity to accelerate the review that is already underway with Verisio.

 

The company plans to publish the terms of reference for the review later this month and publish an update on the supply chain review along with its half year results in September.

 

Initial findings

While the review kicks off this week and the group’s share price takes a massive hit with the bad news, the company’s initial internal investigations suggests that there are some inaccuracies in what has been reported.

 

According to Boohoo: “Our findings show some inaccuracies with last Sunday’s media report. The garments featured were not actually manufactured in Leicester, but in Morocco. Post production, the garments were shipped back to the UK by the supplier to be repackaged into compliant boxes for delivery to the Group’s international distribution centre in Burnley. This was the process that was filmed at a premises formerly operated by Jaswal Fashions Limited.

 

“Jaswal Fashions Limited, contrary to the media report, is not and has never been a supplier for the Group, and does not operate in the unit stated. Investigations over the last 72 hours have highlighted that the order from Nasty Gal was placed with Revolution Clothing Co Limited, who then instructed Morefray Limited to manufacture in Morocco and repackage the garments on their behalf in Leicester.

 

“Our investigation to date has not found evidence of suppliers paying workers £3.50 per hour. However, we have found other evidence of non-compliance with our Code of Conduct and the Group has taken the decision to immediately terminate its relationship with both suppliers.”

 

Home Secretary Priti Patel has called the allegations ’truly appalling’ and vowed to clamp down on “modern slaver”y. The National Crime Agency is investigating the city’s garment industry and has visited premises to investigate concerns around slavery, working conditions and human trafficking.

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