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15 Jul 2020

Sarah Butler, The Guardian,
Sarah Butler, The Guardian

Boohoo: Share prices and sales continue to plummet following revelations of labour rights abuses in UK supply chain; analysts predict cont’d losses

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“Boohoo shares drop 18% as new Leicester factory report threaten sales”, 13 July 2020

Shares in Boohoo dived nearly 18% on Monday on concerns that revelations about poor conditions in Leicester garment factories might hit sales growth and increase costs.

More than £500m was wiped off the value of the fast fashion site … amid new reports of problems at factories in the city where Boohoo sources a considerable portion of its stock.

Analysts at Bank of America … [suggest] that the pace of Boohoo’s sales growth in the UK could be halved … while its costs might have to increase by up to £20m a year in order to fix potential malpractice in its supply chain.

Analysts at Shore Capital also reiterated advice to sell Boohoo’s shares, saying the allegations were likely to mean “growing difficulty” for ethical investors. Aberdeen Standard Investments sold off 27m shares worth about £80m last week…

Bank of America said Boohoo might have to put up prices or pay more for its clothes in order to ensure workers were paid the minimum wage…

The analysts said Boohoo, led by its co-founders, Mahmud Kamani and Carol Kane, needed to do more to gain “full transparency” on the factories making its clothes.

… [the analysts] concluded that the pace of UK sales growth for Boohoo could fall to 15% from 30% in the three months to the end of May…