Fears as Boohoo ‘forcing factories to charge less’

CONCERNS WORKFORCE COULD BEAR BRUNT AS SUPPLIERS ARE TOLD OF ‘DISCOUNTED’ INVOICES

FAST-FASHION giant Boohoo is forcing suppliers in Leicester to charge them less amid a loss of almost £91 million, a source has told the Mercury.

They fear workers will bear the brunt of the impact.

An employee of one of the group’s local suppliers, who has not been named, said the company recently sent an email telling suppliers that orders would be “discounted” by up to 5 per cent. However, he added that invoices showed 10 per cent was deducted on orders for brands under the Boohoo Group.

The employee says suppliers will struggle to afford it and believes it could “lead to what we saw before”, citing the previous scandal over workers’ pay and conditions.

The employee said: “We said we could not afford it - there’s no way we can do it. But they only have one answer - that it is a board decision.

“We’re now working under cost. What that means is we’re keeping up with the same amount of orders but to maintain that we might have to let go of a few people. But a lot of suppliers won’t want to do that.”

Emails seen by the Mercury say founder Mahmud Kamani requested the review of costs and said the deductions were a “board level” decision. The anonymous employee said the group refused to “budge on cost price” despite several requests and claimed the company would resource manufacturing from elsewhere if suppliers could not agree to the change.

The Mercury understands that Boohoo’s decision is based on a feeling suppliers have increased prices in the last two-and-a-half years due to inflation but not brought them back down.

It comes as the fast-fashion giant reported a pre-tax loss of £90.7 million for the 12 months to February 28, 2023. Sales have dropped as shoppers have faced soaring living costs and the retailer also reported an increase in shoppers returning goods which jumped above pre-pandemic levels for the first time.

The group has said it expects profitability to improve in the year ahead with an expected cost deflation and as it makes cost cuts.

The Mercury put the source’s concerns and claims to the Boohoo Group. It declined to comment.

The group currently has 53 Leicester factories and one in Hinckley in its supply chain, according to its global factory list which it committed to publishing as part of its pledge to be more transparent. Boohoo previously said it was “committed to the city of Leicester” after it was found to have known about factory failings in 2020.

It has since become a member of the UK auditing and improvement programme Fast Forward which means all its UK manufacturing sites are subject to audits.

The group also set up the Garment Workers Trust in Leicester in 2021.