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25 Sep 2020 | 08:21

Boohoo pledges overhaul after review finds 'many failings'

(Sharecast News) - Boohoo said it would overhaul its purchasing, governance and supply chain after an independent review found "many failings" at factories making the fast-fashion company's products in Leicester. The company, whose brands include PrettyLittleThing, Nasty Gal and Coast, commissioned leading barrister Alison Levitt to carry out a review in July after Next and other customers dropped its products over allegations of poor treatment of workers in its factories.

Levitt found that some workers in Leicester were not always properly paid for their work and that many did not understand their rights. The company said it was making improvements and that Levitt agreed these started before a wave of bad publicity that prompted the review.

Boohoo's shares collapsed earlier in 2020 after reports alleged workers in Leicester making clothes for the company were paid well below the minimum wage and were forced to work without protection during the Covid-19 lockdown. The allegations added to longstanding concerns about treatment of workers in Leicester's garment industry, which has grown to supply fast-fashion companies such as Boohoo.

The company's shares rose 13.9% to 369.5p at 09:03 BST. They have made back almost all the ground lost after the allegations emerged in early July, causing the shares to drop to 215p.

The review "has identified many failings in the Leicester supply chain" Boohoo said. The company said it was close to appointing a highly experienced person to oversee its plans for change independently.

Boohoo said it would appoint two new non-executive directors including one with a background in environmental, social and governance matters. Supply chain compliance will be discussed at every board meeting from now on, it said.

The company is also appointing a director of responsible sourcing to develop and implement mandatory purchasing principles for buying teams. Buyers will have to carry out training and bonuses will be paid for sticking to the principles with disciplinary action for people placing rogue orders.

Boohoo said it would reduce its list of suppliers while keeping a major presence in the Leicester garment industry, audit all suppliers and invite new manufacturers with a record of ethical policies to join the list.

John Lyttle, Boohoo's chief executive, said: "Ms Levitt's independent review ... has identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and compliance. As a result, the group is implementing necessary enhancements to its supplier audit and compliance procedures, and the Board's oversight of these matters will increase significantly."

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