Boohoo starts independent review of UK supply chain, promises in-depth probe
Boohoo is moving quickly to protect its business as allegations around its supply chain cause online marketplaces such as Asos and Zalando to delist its brands.
On Wednesday, the company said it was setting up an independent review of its UK supply chain with the board “shocked and appalled by the recent allegations that have been made”, although it added that the exposé of Leicester factories that kicked off the scandal contained inaccuracies.
It also highlighted how its own websites make up the bulk of its turnover. It has a “relatively small" wholesale operation and in the last financial year, wholesale accounted for less than 4% of group turnover, as it increased its focus on its direct-to-consumer proposition. In the first four months of the current year, wholesale accounted for just 1.4% of turnover.
Meanwhile, it said it’s “committed to doing everything in our power to rebuild the reputation of the textile manufacturing industry in Leicester. We want to ensure that the actions of a few do not continue to undermine the excellent work of many suppliers in the area, who succeed in providing good jobs and good working conditions”.
The review involves Alison Levitt QC leading the investigation and the firm is also committing an incremental £10 million “to eradicate supply chain malpractice”. And it will accelerate its independent third-party supply chain review with ethical audit and compliance specialists, Verisio and Bureau Veritas.
The company reiterated that it won’t “tolerate any incidence of non-compliance with its Code of Conduct or any mistreatment of workers, and will not hesitate to terminate relationships with any supplier who does not comply”.
But it also said that there were some inaccuracies in the Sunday Times report that kicked off the scandal. It explained "the garments featured were not actually manufactured in Leicester, but in Morocco. Post-production, the garments were shipped back to the UK by the supplier to be repackaged into compliant boxes for delivery to the group's international distribution centre in Burnley. This was the process that was filmed at a premises formerly operated by Jaswal Fashions Limited”.
And it added that “contrary to the media report, [Jaswal] is not and has never been a supplier for the group, and does not operate in the unit stated. Investigations over the last 72 hours have highlighted that the order from Nasty Gal was placed with Revolution Clothing Co Limited, who then instructed Morefray Limited to manufacture in Morocco and repackage the garments on their behalf in Leicester”.
Its investigation to date has also “not found evidence of suppliers paying workers £3.50 per hour. However we have found other evidence of non-compliance with our Code of Conduct and the group has taken the decision to immediately terminate its relationship with both suppliers”.
It also repeated its commitment to UK manufacturing with around 40% of its products made in Britain, although the firm itself owns and operates no manufacturing facilities.
But it recognises the issues that can arise from such a set-up and the independent review of its UK supply chain is intended to identify areas of risk and non-compliance, take action to strengthen future compliance, “and to provide stakeholders with comfort that similar allegations will not recur in the future”.
It will look at supplier compliance with minimum wage regulations, compliance with Covid-19 regulations, working hours and record-keeping, and right-to-work documentation and contracts of employment.
And it plans to update on the review when it delivers its half-year results in September with further updates in January as well as at other points next year.
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