John Lyttle, chief executive of Boohoo, announced plans for the factory as the company struggled to rebuild its reputation after saying in early July that workers at a Leicester clothing factory that supplied Boohoo were being paid as little than £ 3.50 an hour. That’s well below the £ 8.72 minimum wage for 25-year-olds.
Staff were also not wearing face masks to help curb the spread of Covid-19, and an outbreak in Leicester was linked to the city’s garment factories.
Lyttle said the supply chain labor practices exposed by the Guardian and other media had been “upsetting.” “If there are problems in Leicester, I’d rather find and fix that, not run for the hills,” he said.
“We have terminated two vendors as previously announced due to documentation issues that violated our code of conduct,” Lyttle said. “No evidence of [paying as little as] £ 3.50 per hour was found. In the meantime, the independent review will proceed at pace and if evidence of payment below the minimum wage is found at any of our suppliers, we will terminate these relationships. ”
Home Secretary Priti Patel called the alleged labor practices “truly appalling” and called on the National Crime Agency (NCA) to investigate. “Let this be a warning to those who exploit people in sweatshops like these for their own commercial gain,” she said. “This is just the beginning. What you are doing is illegal, it will not be tolerated and we are suing you.
Boohoo has launched an independent review of its UK supply chain, led by Alison Levitt QC, and fired two suppliers, Morefray and Revolution Clothing. The cabinet will provide an update on the review, including its terms of reference, this week.
The company also hired an independent factory auditor, Verisio, who began performing spot checks on the fashion company’s UK suppliers and their contractors in May. Since the scandal, the auditor has visited factories to ensure workers receive information on a confidential whistleblower hotline operated by Verisio.
Lyttle said the new plant “will have the latest equipment and promote the highest standards of health and safety throughout the facility.” He expects him to produce 50,000 clothes a week.
Boohoo has previously said he was “shocked and appalled by the recent allegations” and pledged to work to rebuild the reputation of the textile industry in Leicester. She buys 40% of her clothes from the UK, mostly Leicester, with the rest coming from other countries such as Turkey, Morocco, China, Bangladesh and India.
The scandal has sent Boohoo’s share price plunging and some £ 1.7bn has been wiped from its market value, but it has recovered slightly in recent weeks. Major retailers, including Next, Asos, and Amazon, have pulled all Boohoo clothing from sale.
Establishing its own factory will allow Boohoo to demonstrate best practices, Lyttle said. The company purchased an old one-hectare (2.5-acre) auto showroom to transform it into a new factory.
If the plant is not operational by September, Boohoo will in the meantime lease a temporary site in Leicester. Lyttle said the company is considering opening another factory elsewhere in the UK.
Along with other online retailers, Boohoo, which started out as a market stall in Manchester, has seen sales increase during the Covid-19 pandemic. It is expanding and plans to open another warehouse in the UK in addition to the one in Burnley, which employs 2,500 people.
The production of some of its clothes itself is also part of Boohoo’s strategy to bring its fast fashion to consumers quickly. The Spaniard Inditex, owner of the Zara chain, makes his own clothes so that they can be quickly put in stores.
Lyttle said that while many retailers order inventory six to nine months in advance, Boohoo only plans two weeks in advance. Buying much of its clothing in the UK meant that Boohoo could get its clothing from the factory to customers in days, rather than weeks if imported. Having your own factory should speed things up.