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For those of you who didn’t subscribe the posts be,ow are a copy of the times article. Relatively balanced given it’s from the times who origins,,y exposed the factory issues ,ast July.
Boohoo said the campaign group had failed to recognise the actions it had taken and its remaining suppliers had been forensically audited.
Despite a £4.1 billion value, Boohoo has not moved from the junior AIM market on to the full FTSE market. With an AIM listing, Kamani is eligible for tax breaks, including inheritance tax relief and entrepreneurs’ relief, which reduces capital gains tax from 28 per cent to 10 per cent on share sales. (Entrepreneurs’ relief was scaled back last year, with the lifetime limit cut from £10 million to £1 million.) Kamani and co-founder Carol Kane together sold £142.5 million worth of shares in December 2019.
Boohoo’s unrestrained approach to executive pay also suggests it is not quite ready to join the ranks of blue-chip corporates. Kamani, 56, and Kane, 54, will be eligible for bonuses of £100 million if Boohoo’s market capitalisation hits £7.6 billion by June 2023. Under a separate scheme, Lyttle will pocket £50 million if the market value reaches £6 billion by March 2024.
At its annual meeting on Friday, 20 per cent of shareholders voted against the pay plans for the co-founders and 12 per cent against Kane’s re-election to the board.
The firestorm of negative publicity has done little to sap demand for Boohoo’s clothes among young consumers. Last year sales grew 41 per cent to £1.75 billion and pre-tax profits rose by 35 per cent to £124.7 million.
The City has been less forgiving than Gen Z, though. Boohoo remains uninvestable for many ethically minded institutions, and staying on AIM means index-tracker funds don’t buy the shares.
Panmure Gordon analyst Tony Shiret expects Boohoo to mitigate higher sourcing costs via economies of scale and by moving into higher-margin products.
Gen Z shoppers seem to like Boohoo. Before the City buys back in with gusto, though, Kamani and Lyttle have a lot more work to do.
Mahmud Kamani largely kept his cool during a grilling from MPs in last December’s select committee hearing on the fast-fashion industry. But one particular question raised the hackles of Boohoo’s fiery executive chairman.
The SNP’s John McNally implied that his company was not moving fast enough to address the shortcomings that had led to worker abuses in its Leicester supply chain, detailed in a report by Alison Levitt QC. Kamani snapped. “This is an ongoing process” he shouted over McNally. “Everything in that report, plus some — plus some — is work in progress. Things are being done. Things are being fixed as we speak.”
A second report last week by Sir Brian Leveson backed up Kamani’s comments. The retired judge, appointed by Boohoo to provide independent oversight of its efforts to stamp out malpractice in its supply chain, said everyone he had met at the company was determined to address the issue. Progress was clear and the “tone from the top is both clear and real”.
Boohoo is being recognised for its response to last year’s investigation by The Sunday Times, which revealed how people in its Leicester supply chain were working in unsafe conditions for as little as £3.50 an hour. Over £1 billion was wiped off the company’s value the following day, and Next, Asos and Zalando all removed Boohoo products from their websites. Aberdeen Standard, one of the biggest investors, dumped its shares over Boohoo’s “inadequate” initial response.
Boohoo commissioned an independent review by Levitt, which found that management was aware of “very serious” issues over the treatment of factory workers in Leicester, where it sourced about 40 per cent of its clothes. Levitt’s report painted a picture of a senior team who felt responsible only on a superficial level.
Boohoo has since cut ties with dozens of Leicester factories that fell short of its new, higher standards, and published the list of the 54 it continues to use. John Lyttle, its chief executive, hired former Primark colleague Andrew Reaney to become Boohoo’s director of responsible sourcing.
“They have faced the issues head on. Mahmud is a pragmatist and he understands things have to change. There is still more to do but the early signs are positive,” said Dan Nickols at Jupiter, Boohoo’s biggest institutional shareholder.
Not everyone is convinced. The campaign group Labour Behind The Label said that Boohoo’s response pushed blame down to errant factory owners while failing to acknowledge that its rock-bottom prices were a big contributor to labour abuses.
“Nothing has changed for workers in Leicester,” said Dominique Muller from Labour Behind The Label. “Many workers still receive wages well under the minimum wage — that prices being asked of suppliers fail to cover the legal wage costs.”
https://www.thetimes.co.uk/article/boohoos-year-on-the-naughty-step-8l9grx8p3