Online fashion retailer Boohoo faces an uphill battle in overcoming its reputation after poor treatment of garment workers.
The fast fashion giant has made moves to improve problems in its supply chain in recent months and to make itself more transparent to consumers – but it may not be enough.
Analysts said the measures looked more like an appeal to investors than new customers, after scandals led to divestment from Abrdn and “rebukes” from fund manager Baille Gifford.
“To be fair to the clothier, it has hardly sat on its hands since reports surfaced about poor working conditions in some of its factories,” David Kimberley, analyst at Freetrade told CityAM.
Boohoo published a list of its international factories on Monday, detailing around 1,100 factories, following instruction from an independent review produced by Alison Levitt QC.
The group said it intends to sign a legally binding International Accord for Health and Safety, which looks to improve garment workers’ conditions.
“It’s hard to see what else major shareholders could ask the company to do,” Kimberley added.
The firm’s sales rose 40 per cent in 2021, suggesting Boohoo’s customers were less bothered by the company’s social impact than its shareholders. Consumers are attracted by the firm’s low prices, although some have been put off by the company’s scandals.
It hit the headlines for all the wrong reasons last year after media reports that factory workers in Leicester were being underpaid and not protected against Covid-19.
Boohoo appointed Alison Levitt QC to look into the supply chain allegations, who found they were “substantially true,” despite an initial denial from the firm.
Levitt’s review said Boohoo had inadequately monitored its factories and dubbed a failure to assess the risk to workers during the pandemic as “inexcusable.”
Factories were discovered to have locked fire doors, unhygienic toilets, and “no wholesome drinking water”.
The review concluded profits were “prioritised to the extent that the company lost sight of other issues” and bosses did not pay attention to a series of “red flags” over workers’ safety.
Boohoo apologised for the failings and accepted the recommendations of the review in full.
The chain has also come under fire for its speedy churn of product lines, with consumers more environmentally conscious about their purchases’ impact on the planet.
Freetrade’s Kimberley added: “Unfortunately for Boohoo, these sorts of accusations tend to stick and it will be very hard to shake them off.”
Fund managers would be less keen to invest in the firm and likely to screen the company out based on environmental, social, and governance grounds, Kimberley said.
“Changing that will take time, even with the sorts of transparency measures like the ones we saw today. As a famous investor once said, it takes 20 years to build a good reputation and five minutes to ruin it.”