Boohoo shares fall out of fashion after new factory claims emerge

Clothing retailer Boohoo fell out of fashion with investors again yesterday after a new investigation alleged it had been selling clothes made by at least 18 factories in Leicester that audits say have failed to prove they pay minimum wage to workers.

Third-party audit reports which have been produced over the past four years claim “critical” issues over record-keeping and working hours at the time they were written, The Guardian reported. It also suggested that in parts of the supply chain, workers may be paid as little as £3-£4 an hour.

Claudia Webbe, MP for Leicester East, where many of the factories are based, told the paper that the allegations suggested “an unforgivable breakdown of our basic social contract” and called on Boohoo to urgently release a full list of its suppliers in the city.

Shares fell as much as 15pc on the back of the news, recovering only slightly to end the day 29.8p down at 289.5p.

Stocks in Europe had a mixed end to the week, with the FTSE 100 falling 0.61pc to 5,963.57 and the FTSE 250 climbing 0.15pc to 17,788.33. US futures took a similar approach after venturing back into record territory on Thursday. The Dow managed to erase its 2020 loss.

Elsewhere, plastic and fibre products supplier Essentra slipped into the red as it reported lower pre-tax profits in the first half of 2020 after the pandemic weighed on revenues. The FTSE 250 manufacturer revealed a £7.9m pre-tax profit for the six months to June, compared with £53.1m for the same period last year.

The company said revenue fell 11.7pc to £448.8m for the half-year after the pandemic impacted trading in the second quarter.

It said the outlook remained “uncertain” but it expected to meet full-year market forecasts, barring a second wave of the disease. Shares ended 5p lower at 306.6p.

Meanwhile, video game developer Frontier Developments said its annual sales are to hit the top end of forecasts as it revealed a slew of new releases. Shares lifted more than 9pc higher after the Aim-listed firm said it traded in line with expectations in the year to May following a “strong close” to the period.

The Cambridge-based company expects to deliver revenue within the top half of its current range of £83m to £95m for the full year to May 2021. Shares were 190p higher at £22.70.

Amigo Holdings was one of the biggest risers yesterday, soaring 15.8pc despite reporting a huge drop in profit, as the company paused most new lending during the Covid-19 pandemic. It made a £3m pre-tax profit in the three months ending June 30, down more than 83pc on this time last year.

Finance director Nayan Kisnadwala said: “The whole team at Amigo is focused on addressing our legacy issues and building a sustainable business for the long term.”

The Bournemouth-based lender, which is behind Amigo Loans, ended 1.9p higher to 13.9p.