Boohoo shares slump on labour claim
ONLINE fashion giant Boohoo today mounted a full-throated defence of its operations and supply chains after its share price slumped following reports it could face a US import ban over labour abuse allegations.
The company told investors it had not been contacted by the US authorities and was not aware of any investigation.
It said it is confident with actions it is taking to ensure products pass US customs criteria, amid a clamp-down on items made using forced labour and will “work with any competent authority to provide assurance that products from its supply chain meet the required standard”.
The Sky News report nevertheless spooked investors, with the share price dropping by some 6% in early trading. It recovered to 330.10p by mid-morning, but was still down 4.2% on the last session’s 344.70p closing price.
The report claimed that customs officials in the US — where last year Boohoo’s £263million sales were more than a fifth of the company’s total revenue — had seen enough evidence to launch an investigation after petitions from British campaigners. In a statement to the stock market, the company said: “If the group were to discover any suggestion of modern-day slavery it would immediately disclose this.”
Today’s report comes after allegations last year that some factories in the UK working for Boohoo were paying staff as little as £3.50 an hour.
The group has since appointed Sir Brian Leveson to oversee its attempts to move on from the scandal.
In January said it was making “excellent progress” to put in place recommendations of an independent review, having removed 64 companies from its supplier list.
Danni Hewson, an analyst at AJ Bell, said Boohoo was quick to react to the reports “but these new allegations will hurt the reputation of the business still trying to regain its sparkle.
“Investors will be keeping a close eye on how quickly Boohoo can put this issue to bed once and for all”.