Online fashion retailer Boohoo cuts ties to more than 400 suppliers


Scandal-hit retailer Boohoo has slashed its supplier network by more than 400 firms after allegations factory staff were paid less than minimum wage emerged.

The online fashion firm shared its list of 78 approved suppliers across 100 factories, which was a significant drop on the 500 suppliers previously identified in an independent review of the business by Alison Levitt QC.

It comes just weeks after Boohoo and many of its suppliers were said to be facing an investigation which raised the possibility of a United States import ban because of widespread allegations over the use of slave labour. 

Boohoo has worked to sever ties with 64 factories, consolidate others and cut out subcontracting after it was alleged last year that some factories in the UK working for the firm were paying staff as little as £3.50 an hour and had working conditions which did not meet lockdown restrictions.

Last month Boohoo announced a £25.2million deal to buy Dorothy Perkins, Wallis and Burton as the fast fashion giant continued to carve up the remains of Sir Philip Green’s Arcadia empire with rival ASOS. 

Boohoo revealed a list of 78 approved suppliers across 100 factories – a significant drop on the estimated 500 suppliers previously identified in an independent review of the business by Alison Levitt QC (pictured is a publicity photo from the company)  

The group said it has ‘ceased doing business with a number of manufacturers who were unable to demonstrate the high standard of transparency required, despite being provided with opportunities to address any issues identified in the auditing process’.

It added that it asked the remaining suppliers to bring their so-called cut-make-trim units in-house ‘to allow for greater oversight and remove the issue of unapproved subcontracting’.

The company had more than £1 billion wiped from its share value in two days after an article last year revealed the factory allegations. 

As other retailers such as Next and Asos dropped Boohoo clothing from their websites, the company hired top lawyer Ms Levitt to look into the allegations which its board said left them ‘shocked and appalled’.

In September last year, Ms Levitt found that there were ‘serious issues’ in the company’s supply chain.

Pictured: Workers at the Faiza Fashion factory in Leicester last summer. The factory supplied clothes to Boohoo

Pictured: Workers at the Faiza Fashion factory in Leicester last summer. The factory supplied clothes to Boohoo 

Boohoo has since pledged to strengthen internal controls, overhaul its suppliers and is also launching a sustainability strategy, called Up Front, to reduce its carbon footprint.

Bosses also hired judge Sir Brian Leveson to supervise the firm’s Agenda for Change reforms.

In his second report published separately on Thursday, Sir Brian noted that improved supplier audits have changed the way the industry is run in Leicester and noted Boohoo’s efforts to embed a new way of working.

Boohoo boss Mahmud Kamani

Boohoo boss Mahmud Kamani 

John Lyttle, chief executive of Boohoo, said: ‘This is the not the end of a project for us at Boohoo but the beginning of a new way of working with our suppliers.

‘The publication of our UK Supply Chain List marks another step on our journey towards greater transparency and embedding positive change, not only in our own organisation, but through the wider network of businesses that make up our supply chain.’

Shares in Boohoo lifted two per cent.

Retail analysts at Jefferies said: ‘We see today’s publication of a fully audited UK supplier list as an important step in re-establishing trust in the business and momentum in the shares.’ 

US Customs and Border Protection said it had seen enough evidence to launch an investigation after petitions from British campaigners, Sky News reported at the start of this month. 

In response, Boohoo defended its labour practices and said it was ‘not aware of any investigation’. 

Duncan Jepson who runs Liberty Shared, a charity that campaigns against modern slavery, argued that Boohoo was not doing enough to investigate claims of suspected forced Labour at its suppliers’ factories in Leicester.  

Boohoo - owned by Mahmud Kamani (pictured left with Snoop Dogg, Boohoo CEO Carol Kane and his son Samir Kamani in 2018) - has now bought Dorothy Perkins, Wallis and Burton for £25m, weeks after purchasing Debenhams

Boohoo – owned by Mahmud Kamani (pictured left with Snoop Dogg, Boohoo CEO Carol Kane and his son Samir Kamani in 2018) – has now bought Dorothy Perkins, Wallis and Burton for £25m, weeks after purchasing Debenhams

He said: ‘The evidence of Boohoo and forced labour is quite compelling. I think it will be a wake-up call for British institutions about how they’re handling modern slavery enforced labour, particularly in a community like Leicester East.

‘What we’d all like, those of us interested in improving labour conditions, is for Boohoo to really get to grips with governance of their supply chain to ensure there is no wage theft and people have proper contracts.’  

Boohoo tells Leicester suppliers not to sub-contract after sweatshop scandal

Boohoo told its Leicester-based suppliers that all clothes must be made in-house and cut ties with all sub-contractors. 

The company launched an ‘immediate investigation’ saying it was ‘shocked and appalled’ by the revelations workers in the city were paid as little as £3.50 an hour.

Home Secretary Priti Patel said the alleged conditions in the city were ‘truly appalling’, while critics said the reality of Leicester’s sweatshop garment industry has been an ‘open secret’ for many years.

In an email to suppliers seen by the BBC, the company suppliers must ‘bring all finished goods manufacturing in-house’.

Boohoo said it is ‘a mandatory requirement and not open to negotiation.’

Home Secretary Priti Patel said the alleged conditions in Leicester were ‘truly appalling’, while critics said the reality of Leicester’s sweatshop garment industry has been an ‘open secret’ for many years.

In an email to suppliers seen by the BBC, the company suppliers must ‘bring all finished goods manufacturing in-house’.

Boohoo said it is ‘a mandatory requirement and not open to negotiation.’ 

It said it is continuing to fulfil orders for US customers and will ‘work with any competent authority to provide assurance that products from its supply chain meet the required standard’.

In a statement, Boohoo said: ‘The group has not received any correspondence from, nor is it aware of any investigation by, US Customs and Border Protection.

‘Over the past eight months the group has been working closely with UK enforcement bodies.

‘If the group were to discover any suggestion of modern-day slavery it would immediately disclose this to the relevant authorities.’ 

Meanwhile, Boohoo, owned by billionaire Mahmud Kamani, said they would be buying the brands and stock from Dorothy Perkins, Wallis and Burton but would shut all 214 physical stores, concessions or franchises with 2,450 job losses.

The deal spells another step into the mainstream for Mr Kamani’s Boohoo, which had its reputation badly damaged last year.   

The £25million deal for Dorothy Perkins, Wallis and Burton means that more of the biggest names on the British high street are vanishing for good during the pandemic.

Burton was founded in 1903 by Meshe Osinky, a Lithuanian Jew who fled the pogroms of his country for a new life in Britain with no money and no English, before changing his name to Montague Burton and building one of the biggest male clothing empires in the UK and Europe.

The deal will see all 214 physical stores, concessions or franchises close with 2,450 job losses

The deal will see all 214 physical stores, concessions or franchises close with 2,450 job losses

At its height Burton employed over 10,500 people in 400 stores and had the largest clothing factory in the world in Leeds, becoming a mainstay of the FTSE 100 before collapsing under the leadership of Sir Philip Green who bought it in 2002. 

Around 260 jobs, mainly head office roles, will be saved as they move with the brands to Boohoo. These include jobs in design, buying and merchandising, and the businesses’ digital wings.

Some other staff will be kept on during a months-long transition period, Deloitte said.

The deal will see the brands transfer over to online fashion giant Boohoo, whose fortunes have increased as those of its high street predecessors waned.

Chief executive John Lyttle said: ‘We are delighted to announce the acquisition of the assets associated with the online businesses of the three established brands Burton, Dorothy Perkins and Wallis.

‘Acquiring these well-known brands in British fashion out of administration ensures their heritage is sustained, while our investment aims to transform them into brands that are fit for the current market environment.

‘We have a successful track record of integrating British heritage fashion brands onto our proven multi-brand platform, and we are looking forward to bringing these brands on board.’

Boohoo chairman Mahmud Kamani added: ‘This is a great acquisition for the group as we extend our market share across a broader demographic, capitalising on growth opportunities as more and more customers shop online.

‘We continue to grow our portfolio of brands and customer base, strengthening our position as a leader in global fashion e-commerce.’

The deal marked an extraordinary few weeks for British retail where billionaires battled for some of its biggest names.

On January 25, Boohoo bought the Debenhams brand but revealed it would axe up to 12,000 jobs. 

Debenhams was sold for £55million but was valued at £1.7billion when it was floated on the London Stock Exchange in 2006 and made a record £160million profit in 2013. Its shares became worthless after annual losses approached £500million.

Wallis will not be seen again on the British high street as Sir Philip Green's Arcadia empire crumbled

Wallis will not be seen again on the British high street as Sir Philip Green’s Arcadia empire crumbled

Despite Boohoo’s sweatshop scandal, revenues jumped 40 per cent to £660.8million and profits surged to £68.1million during the pandemic, Boohoo Group, which also owns the PrettyLittleThing website run by Mr Kamani’s playboy son Umar, announced earlier this month. 

His  son Umar tweeted about the purchase: ‘Mad that we used to go into Debenhams every Saturday looking for cheap TV’s with my dad’. 

On February 1 ASOS revelled in the deal after winning a battle with rival Boohoo to grab the crown jewels of Sir Philip’s Arcadia empire after its collapse last year. 

It said on Twitter: ‘The rumours are true… @Topshop & @Topman are now part of the ASOS family’. 

But one Arcadia employee said minutes later: ‘Nice way to find out I’ve lost my job, ASOS, great move for the people.’ Another added: ‘Thanks for informing me I’ve lost my job, after 10 years. Very compassionate.’ And a third said: ‘It’s actually disgusting. I’ve worked for Topshop for two years and my own manager found out through Sky News as the administrators didn’t inform us.’    

ASOS hopes the deal will help it grow in the US. The sale will see 300 shops shut down and 2,500 store staff lose their jobs. But it will ‘look at’ saving Topshop’s flagship Oxford Street store.  

Indian-born billionaire who launched fast fashion firm Boohoo from Manchester market stall and expanded online with his playboy children

Boohoo founder Mahmud Kamani, pictured right, alongside his son Umar, didn't want to spoil his children, but helped them set up Pretty Little Thing

Boohoo founder Mahmud Kamani, pictured right, alongside his son Umar, didn’t want to spoil his children, but helped them set up Pretty Little Thing

The Indian-born founder of fast-fashion company Boohoo grew his Manchester market stall into a £2.6billion business.

Before Boohoo shot onto the ever-growing fast fashion scene, its owner Mahmud Kamani, 55, sold handbags in traders’ stall.  

He spotted the potential of internet sales and set up his online retailer in 2006 with the aim of delivering their own-branded fashion at rock bottom prices.

It since became synonymous with the wildly popular, yet equally controversial, fast-fashion phenomenon. 

Its sales topped £850 million in 2019, propelling Mr Kamani to 131st place on The Sunday Times Rich List, with a family fortune of £1.16 billion.

Mr Kamani’s parents, who were originally from India, arrived in Manchester from Kenya in 1969 when his father was just two years old.

The Kamanis were forced to flee to Britain by increasing unrest and draconian employment laws that favoured native Kenyans.

Entrepreneurial Mahmud sold handbags on a market stall. He invested his money wisely in property and began a wholesale business, Pinstripe, sourcing garments from India.

By the early 2000s, the company was selling £50 million-worth a year to high street brands such as Topshop and Primark, which led to Mahmud setting up the Boohoo brand in 2006. 

The company’s growth quickly skyrocketed and is now believed to be worth £2billion or more and employing 2,352 people.  

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