* Media report highlighted dire working conditions
* Supply chain review to be led by Alison Levitt QC
* Next and Zalando delist Boohoo products
* Shares have lost a third of value this week
* Shares down 16% at 0942 GMT
(Adds detail, analyst comment, shares)
By James Davey
LONDON, July 8 (Reuters) - Boohoo commissioned an
independent review of its supply chain in Britain on Wednesday
after a damaging media report about dire factory working
conditions put the brakes on the online fast fashion retailer's
meteoric rise.
While factory conditions in Asia have long been in the
spotlight, the exploitation of low-paid workers in Britain has
also come to light in recent years, with a parliamentary
committee examining the issue in 2019.
However, regular exposés into British and overseas supply
chain conditions have had little impact on the popularity of
fast fashion amongst consumers.
Boohoo shares have lost about a third of their
value since The Sunday Times reported that workers in a factory
in Leicester, central England, who were making clothes destined
for Boohoo were paid as little as 3.50 pounds ($4.39) an hour.
The newspaper said the factory was also operating last week
during a local coronavirus lockdown, without additional social
distancing measures, while a workers' rights group said that
people at supplier factories were being put at risk of
infection.
Boohoo, which sells own-brand clothing, shoes and
accessories targeted at 16 to 40-year-olds, said on Wednesday
that its investigation to date had not found evidence of
suppliers paying workers 3.50 pounds an hour.
However, it had found evidence of non-compliance with its
Code of Conduct and ended its relationship with two suppliers.
Boohoo shares were down 16% at 0942 GMT after Next
and Zalando took its products off their websites.
RAPID GROWTH
The British parliament's Environmental Audit Committee
called on the government in February 2019 to end the era of
throwaway fashion, although all its recommendations covering
labour market practices were rejected.
Boohoo has grown rapidly since it was founded in Manchester
in 2006 and at Friday's market close was valued at nearly 5
billion pounds, more than double that of Marks & Spencer
, Britain's largest clothing retailer by sales value.
"We are deeply shocked by the recent allegations about the
Leicester garment industry," CEO John Lyttle said.
The review will focus on 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, Boohoo said.
It is being led by senior lawyer Alison Levitt with the
board represented by Brian Small, Boohoo's senior independent
director.
The firm would also accelerate its independent third party
supply chain review with ethical audit and compliance
specialists, Verisio and Bureau Veritas, and would invest 10
million pounds to tackle the problem.
Boohoo said it would also work with interior minister Priti
Patel and local officials on any future investigations.
"While serious questions will remain for some time, today is
the first positive step forward in transparency," Liberum
analysts said.
($1 = 0.7972 pounds)
(Reporting by James Davey; Editing by Kate Holton and Alexander
Smith)
Marks & Spencer (MKS)
Next (NXT)