RE: FT this am9 Jul 2020 07:24
Boohoo’s chief executive insisted that his company had “nothing to hide” after fresh allegations about the treatment of workers who make its clothes. Some of the fast-fashion retailer’s biggest investors are betting he is right.
The company’s largest independent shareholder, Jupiter Asset Management, increased its holding on Monday, even though Boohoo’s share price went into freefall after the Sunday Times alleged that factories supplying Boohoo were paying as little as £3.50 an hour.
The fund manager raised its Boohoo stake, acquired through its recent acquisition of Merian Global Investors, from 9.6 to 10.1 per cent “following conversations with management about its strategy”.
Another top-25 shareholder said that while it was “fully aware” of recent concerns and would be raising them with management, “this kind of supply chain issue is not new and one we have identified and discussed as a significant business risk for Boohoo and many other retailers in the fast-fashion industry”.
The support from investors provided some relief to Boohoo in an otherwise crushing week that has seen more than £2bn wiped off the retailer’s £5bn market value and left it battling a backlash on social media, the suspension of its brands from several fashion websites and threats of enforcement action.
Boohoo has shrugged off previous revelations about suppliers in Leicester, including an investigation in 2018 by the Financial Times that found unsafe working conditions, unauthorised subcontracting and underpayment of wages.
But a suggestion that the city’s cramped, low-tech factories contributed to a spike in Covid-19 cases, and threats from cabinet ministers to shut down those not practising social distancing, mean this time it may be harder to bounce back
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