Boohoo mulls closure of fast fashion factory amid sales dip

BOOHOO is considering closing a flagship factory in Leicester just two years after opening, as the fast-fashion retailer grapples with falling sales and an ethical overhaul.

The anticipated shutdown at its site on Thurmaston Lane comes amid declining demand post-pandemic, which has forced Boohoo to cut costs.

Fewer than 100 jobs will be affected by the decision, with some roles set to be relocated to Boohoo’s other factories.

At the time of its opening in 2022, Boohoo said the factory would employ around 250 people and produce about 50,000 garments a week, according to Drapers, which first reported the news.

It marks the latest setback for Boohoo, which has been hit by ethical concerns ever since a modern slavery investigation in 2020 revealed poor conditions and low pay in factories linked to the retailer.

The allegations wiped £1bn from the company’s value, with Boohoo now facing the prospect of a £100m lawsuit by investors who lost out at the time. The claims were verified in an independent review by Alison Levitt KC, who found that they were “substantially true”.

Last year, a BBC Panorama investigation also accused the business of pressuring suppliers to reduce prices after deals had already been agreed. At the time, Boohoo responded by saying suppliers had worked with the company for many years and “that would not be possible if the work was not profitable”.

Boohoo benefitted from a surge in demand during the pandemic as shoppers ordered online, driving sales up by 41pc from 2020 to 2021. Since restrictions eased, Boohoo has been hammered by surging costs and increased competition from retail rivals. The company said in October that sales were down 10pc over the six months to August 31, with the business swinging from a £6.2m pre-tax profit to a £9.1m pre-tax loss.

Retail tycoon Mike Ashley has spent recent months building up a stake in Boohoo, since becoming its single largest shareholder with a stake of 17.2pc.

A Boohoo spokesman said: “As in any retail business the role of our sites continues to evolve and following significant investments at our Sheffield distribution centre and the opening of a new distribution centre in the USA, we must now take steps to continue to ensure we are a more efficient, productive and strengthened business.

“We are now in a period of consultation and are working closely with all affected colleagues to ensure they are fully supported during this process.”