Online fashion company announced on Wednesday that it will launch an immediate independent review of its UK supply chain following allegations that some garment factories in Leicester paid workers below wages minimum and would not have protected them against coronavirus.
who owns brands such as Pretty Little Thing and Nasty Gal, said the exam will be led by top lawyer Alison Levitt QC. He said he would initially commit to investing an additional £ 10 million to “eradicate bad practices in the supply chain”.
“We take all allegations of professional misconduct, poor working conditions and underpayment of workers very seriously,” Boohoo said in a statement.
Boohoo shares fell another 16.24% in early European trades on Wednesday after losing a third of their value this week following the Sunday Times report which alleged that workers at a plant in Leicester, England , who sells clothes for Boohoo, was paid as little as £ 3.50 an hour. The minimum wage for people aged 25 and over in the UK is £ 8.72.
Several online retailers have since abandoned the sale of Boohoo products on their websites.
Wednesday, Amazon AMZ,
said it would remove Boohoo’s products while the company was investigating. “Business partners are required to comply with all applicable Amazon laws, regulations and policies when selling in our store. We will suspend the sale of the brands in question, “a spokesperson for MarketWatch said in an emailed statement.
Amazon owns shares of Boohoo and its associated brands as a result of historic agreements.
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The British government extended the foreclosure of Leicester last week after a sudden increase in the number of coronavirus attacks. Health Secretary Matt Hancock said on Tuesday that the number of new infections a day in the city had increased from 135 to 117 per 100,000 residents.
Boohoo said his investigation has so far found no evidence of suppliers paying £ 3.50 an hour to workers. “However, we found other evidence of non-compliance with our code of conduct and the group made the decision to immediately end its relationship with the two suppliers. “
was the first major fashion retailer to take action, removing all of the Boohoo and Pretty Little Thing items it previously sold on all of its websites last week. “The next one looks forward to seeing the results of the investigation that Boohoo has announced. Meanwhile, Next has no plans to resume selling Boohoo labels until the investigation is completed and no corrective action has been taken, “said the company.
Berlin-based online fashion store Zalando ZAL,
said it had made the decision to withdraw all products from the Boohoo group and its subsidiaries and to suspend all new business with Boohoo effective July 7. A spokesperson for Zalando said he had made ethical and sustainable metrics assessments mandatory for its partner brands.
“Only after all corrective actions have been satisfactorily dealt with by Boohoo, can a conversation be re-examined to discuss the business relationship between Zalando and the Boohoo group,” the spokesperson told MarketWatch in a press release sent by email.
said it also temporarily suspended business relationships with all Boohoo brands until Boohoo has completed its investigation and has received necessary assurances regarding supply chain practices.
“The decision by resellers, ASOS, Zalando and Next to remove Boohoo brand products from their websites is a bold decision, but the right one to send a clear message to consumers that they do not approve of these practices. As these retailers stock hundreds of brands, they shouldn’t lose many, as Boohoo lost its main wholesale partners, which had an impact on its sales, “said Emily Salter, retail analyst at GlobalData.
Citi analysts said that Boohoo, which sells its products through a variety of third-party sites, “found the balance between the speed of the investigation and the guaranteed independence of the investigation and reiterated the importance of this question for the group “.
“Third-party aggregators represent only a small part of the revenue mix, but we think that will reassure them enough to restock the Boohoo product. Based on this, we believe that management has reacted quickly to these problems and that the stock price should start to go up, “Citi analysts wrote in a research note on Wednesday.
Boohoo said it has retained Verisio and Bureau Veritas compliance services to expedite its independent third-party supply chain review, which is already underway with Verisio.
Although there is no evidence that these Leicester workers contributed to the spread of COVID-19, the pandemic has hit immigrant workers hard in several countries where living conditions increase the risk of contagion and possible loss employment and health insurance coverage.
On Saturday, the Catalan regional government confined residents of the county de Segrià, in Lleida, after several outbreaks were detected in fruit companies, a food company, a residence for the elderly, a block of flats and a hostel for the homeless, according to the Spanish newspaper El País.
In the U.S., the Centers for Disease Control and Prevention reported on Tuesday that among 23 states reporting COVID-19 outbreaks in meat and poultry processing facilities, there were 16,233 cases in 239 facilities, including 86 deaths related to COVID-19. Among 9,919 (61%) cases in 21 states that revealed race and ethnicity, 87% occurred among workers belonging to minorities.