Boohoo - Paul Scott - Small Cap Value Report - Stockopedia - 25 March 202128 Mar 2021 08:06
Sir Brian Leveson has published this report, in his role overseeing the Agenda For Change programme at BooHoo - cleaning up its supply chain.
It’s only 19 pages, and makes interesting reading. For now I’ve only read the Executive Summary, and find it very reassuring. It explains the oversight work that Leveson has done (lots of meetings online), which has left him impressed -
Suffice to say, I have no doubt about the determination of all those whom I have met to address the failings for which boohoo has been criticised and both to promote and to embed a new way of working.
Suppliers have been audited twice, and really extensive work has been undertaken to sort out these issues.
I think this is a very positive report for BooHoo, it’s clear that Leveson approves of what they are doing, concluding -
Having previously recognised that boohoo had implemented real change and accelerated that change following publication of the Review, it is clear that such enthusiasm has continued unabated and is evident in every group contacted.
Very real progress continues although there is some way to go to ensure the changes put in place become business as usual.
My opinion - I’ve been amazed at how long this ESG issue has dragged on for, with the press in particular regurgitating the same story numerous times (about Leicester factories). Let’s hope the press might at long last acknowledge that BOO couldn’t be doing more to clean up its supply chain, and give the company some support.
No other retailer has had anything like this scrutiny, so it does feel wildly disproportionate to paint BOO as the villain, in an industry that is known for widespread supply issues, globally. Workers in Leicester are probably paid more, and work in better conditions, than garment manufacturers practically anywhere else on the planet! Where is the press scrutiny of the 4 million Bangladeshis paid 50p per hour, living in slums, who make the clothing for many High Street retailers? There is none, just silence.
The costs of this supply chain clean up must be considerable, and there’s no doubt that Leicester-sourced product will cost more. Of course, Leicester wasn’t used for low cost, it was used for speed to market. Overall then, I doubt whether margins are likely to reduce, because imported product is likely to replace some of the Leicester production, and of course imports are cheaper.
Let’s see what the numbers look like, that’s what matters - results for FY 02/2021 are due out in May. The press, and investors, might obsess about ESG, but BooHoo’s customers don’t. A recent broker note said there was no indication that any of this has affected the popularity of BooHoo products or brand.
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