Boohoo cuts ties with UK supplier after overtime work allegations

Boohoo Group Plc said it stopped working with a UK supplier after allegations that warehouse staff were forced to work overtime.

The move came to light on Friday after a BBC documentary titled “Boohoo's Broken Promises” accused the fast fashion chain of putting undue pressure on clothing suppliers. Boohoo has not reneged on any of its commitments to clean up its supply chain, chief executive John Lyttle wrote in a letter to Philip Dunne, chair of the Environmental Audit Committee, sent in December and published on Friday.

Boohoo is still reeling from a job offer scandal in 2020, when some of the company's UK clothing suppliers paid less than the minimum wage and skimped on safety precautions at Leicester factories amid a Covid outbreak. Those revelations prompted a management review, with Boohoo removing more than 400 companies from its supplier network and carrying out an independent review of the business.

The company's shares fell as much as 4.6% on Friday. They have lost more than 90% of their value since their peak in 2020.

CEO Lyttle added that Boohoo's efforts to reduce supplier prices are a temporary measure given declining inflation, not an ongoing program of regular price reductions. The BBC documentary, which aired in November, included footage of a journalist working undercover at Boohoo's Manchester head office, as well as footage from inside the supplier's warehouse.

The online retailer, which owns brands such as NastyGal and PrettyLittleThing, said its price negotiations with suppliers reflect declining input costs after a period of high inflation.

“It is only right that our suppliers reflect that in their prices,” Lyttle wrote.

Separately, Boohoo is closing its warehouse on Thurmaston Lane in Leicester, putting fewer than 100 staff at risk of redundancy. The chief executive said the decision was made after investing in a distribution center in Sheffield and opening a new facility in the United States.

Boohoo opened the Thurmaston Lane warehouse just two years ago to much fanfare, as it sought to set an example by bringing some manufacturing in-house in Leicester and representing best practice, combating some of the criticism the company had received.

Earlier this month, the BBC reported that Boohoo had labeled clothing made in South Asia as “Made in the UK”, saying workers at the Thurmaston Lane facility had removed the original labels from plain T-shirts and hooded sweaters Boohoo told the news agency this was due to a misunderstanding of labeling rules. CEO Lyttle did not comment on the labels in his letter to the EAC.

Dunne, chairman of the committee, said Friday that the documentary was “concerning” and that the mislabeling of the clothing is “concerning.” “I am confident that the company is taking urgent action to ensure that correct labeling practices are applied across all of its UK operations,” he wrote.

The retailer, which sells mini dresses for £12 ($15) and T-shirts for £6, has had a tough few years as shoppers returned to stores after the Covid pandemic and upstart e-commerce rival Shein gained market share . This week, CFO Shaun McCabe resigned with immediate effect and was replaced by former Betfair and Zoopla CFO Stephen Morana.