Boohoo faces boy­cott from in­flu­encers

Train­ers and sports­wear seller was a star of the high street but even its out­stand­ing per­for­mance can­not buck the gloom of new nor­mal

The Daily Telegraph - Business - - Front Page - By Laura Onita

BOOHOO could face an ex­o­dus of the prized so­cial me­dia in­flu­encers who pro­mote its clothes af­ter a re­al­ity TV star called for a boy­cott over a “sweat­shop” scan­dal.

The com­ments by Vas J Mor­gan pose a threat to the fast-fash­ion busi­ness, which re­lies on celebri­ties to talk up its prod­ucts on­line. It spent at least £90m on celebrity en­dorse­ments and other mar­ket­ing costs last year.

Mr Mor­gan said he was sad­dened by rev­e­la­tions that some Boohoo clothes were made in a Le­ices­ter fac­tory ac­cused of pay­ing il­le­gally low wages.

On Instagram, he said: “My heart hurts for the fam­i­lies that have suf­fered at the hands of com­pa­nies that fail to do due dili­gence … Com­pa­nies that make bil­lions off the back of hard-work­ing peo­ple try­ing to feed their fam­ily.”

Mr Mor­gan ap­peared on ITV show The Only Way Is Es­sex un­til 2018. He said he had col­lab­o­rated with Boohoo as well as pro­fes­sion­ally and per­son­ally sup­port­ing its brands, which also in­clude Nasty Gal and Pret­tyLit­tleThing.

Three Ir­ish in­flu­encers also said they were either paus­ing work with the brands or had de­manded an­swers.

Boohoo has launched an in­ves­ti­ga­tion and vowed to cut ties with un­eth­i­cal sup­pli­ers.

Along with Next, Games Work­shop and one or two oth­ers, JD Sports is among a se­lect group of re­tail­ers who have com­pre­hen­sively de­stroyed the myth that the high street is dead. The chain came into the cri­sis fir­ing on all cylin­ders. Turnover leapt nearly a third from £4.7bn to £6bn in the year to the start of Fe­bru­ary, and profit jumped by a quar­ter to £439m, beat­ing the high­est es­ti­mate of City an­a­lysts.

In a nor­mal world, record fi­nan­cial fig­ures would be the trig­ger for fur­ther im­pres­sive stock mar­ket gains. Yet its shares took a size­able 3pc hit in early trad­ing.

In the rub­ble of ground zero, past per­for­mance counts for lit­tle. The fo­cus is on the here and now. In­vestors only re­ally care about what the re­cov­ery looks like and even at JD Sports the mood is de­cid­edly som­bre.

Skip past the “highlights” sec­tion of the an­nounce­ment, all the talk of “record re­sults” and “in­ter­na­tional de­vel­op­ment”, plus the boast about strong trad­ing in Amer­ica, and the pic­ture is sober­ing. Foot­fall in its Euro­pean stores has re­mained “sub­dued” de­spite re­open­ings, and chair­man Peter Cowgill ex­pects “un­cer­tain” foot­fall “for the fore­see­able fu­ture”.

There is even a warn­ing that so­cial dis­tanc­ing mea­sures dis­pro­por­tion­ately pun­ish its stores, where trad­ing is largely con­densed into the week­ends and school hol­i­days.

Cowgill is no less gloomy about the long-term out­look, ad­mit­ting to “con­sid­er­able un­cer­tainty” about con­sumer be­hav­iour.

This is the world that com­pa­nies are now op­er­at­ing in. Trad­ing hasn’t mag­i­cally re­turned to pre-cri­sis lev­els now that lock­down has lifted. It is way be­low where it was and chief ex­ec­u­tives have no idea when it will re­bound, if at all. Some fear it may never do. As JD Sports says, “con­sumers re­main ner­vous” about “en­closed spa­ces”.

Take Whit­bread, op­er­a­tor of the na­tion­wide Pre­mier Inn ho­tel chain. Hav­ing been forced to close all of its 270 sites, apart from 39 that re­mained open for key work­ers, the end of lock­down couldn’t come soon enough. Sales plunged 80pc in the 13 weeks to the end of May. Yet, it is al­ready warn­ing of “volatil­ity” in coun­tries that lifted re­stric­tions ear­lier.

In the UK, it says there is “good de­mand” in “tra­di­tional” tourist des­ti­na­tions but other re­gions, in­clud­ing London, “re­main sub­dued”. Even an at­tempt to talk up a re­cent £1bn rights is­sue risks back­fir­ing. Yes it has strength­ened the balance sheet but only in an­tic­i­pa­tion of “a long pe­riod of low rev­enues”. No won­der the shares dropped by more than 5pc.

Chief ex­ec­u­tives are trapped be­tween hav­ing to be hon­est and want­ing to re­main pos­i­tive. Cowgill in­sists JD Sports can still “pros­per”, while Whit­bread’s Ali­son Brittain would have us be­lieve that it will emerge from the cri­sis in a stronger po­si­tion.

But if you don’t know what the fu­ture will look like how can you be so sure that you will be OK?

‘In the rub­ble of ground zero, past per­for­mance counts for lit­tle’

Fick­le­ness of fash­ion

“The truth will al­ways come out” came a cryp­tic but quickly deleted tweet from Umar Ka­mani, the son of Boohoo founder Mah­mud, as the fall­out from fresh al­le­ga­tions of labour ex­ploita­tion in Le­ices­ter’s cloth­ing sweat­shops con­tin­ues.

Of course Ka­mani ju­nior may have been re­fer­ring to some­thing else en­tirely but the tim­ing is un­for­tu­nate. He is also the boss of its most suc­cess­ful brand Pret­tyLit­tleThing, so not just a rogue fam­ily mem­ber run­ning loose on so­cial me­dia.

Boohoo and the Ka­mani fam­ily, who have made a for­tune off the com­pany’s suc­cess, need to demon­strate that they are tak­ing the claims se­ri­ously by con­duct­ing a sweeping au­dit of the sup­plier base. Boohoo has said it sees worker wel­fare as an “ab­so­lute” pri­or­ity and is in­ves­ti­gat­ing but af­ter tum­bling 23pc on Mon­day, its share price took an­other, al­beit smaller, hit yes­ter­day.

An even big­ger con­cern may be the in­ter­ven­tion of oth­ers. Af­ter Next pulled Boohoo prod­ucts from its on­line store say­ing the fast-fash­ion gi­ant “has a case to an­swer” over al­le­ga­tions of labour ex­ploita­tion, Asos and Za­lando fol­lowed suit. Mean­while one re­al­ity TV star and “in­flu­encer” has called for a boy­cott.

Both could quickly spiral into a wider back­lash, in­clud­ing cus­tomers, that threat­ens long-term dam­age to the Boohoo brand. There’s noth­ing more fickle than fash­ion.

Di­min­ish­ing Reach

The loss of 500 jobs at news­pa­per pub­lisher Reach un­der­lines how the cri­sis is ac­cel­er­at­ing change ev­ery­where.

Un­for­tu­nately, de­spite the best ef­forts of the owner of the Mir­ror and Ex­press ti­tles, that change is likely to be to­wards a smaller and less prof­itable com­pany. There will be plenty more like it.

Vas J Mor­gan, a for­mer star of ‘The Only Way Is Es­sex’, said he was sad­dened by claims some Boohoo clothes were made in a Le­ices­ter fac­tory ac­cused of pay­ing il­le­gally low wages

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