Boohoo stock plunges again
Prominent shareholders jump ship from embattled retailer
Boohoo suffered another share price plunge on Monday, after a number of prominent shareholders sold off their holdings.
By mid-afternoon, the British online fashion retailer traded down 15 per cent at 237.6 pence, having hit an all-time high of 433.5 pence less than a month beforehand.
Accusations of poor working conditions at a Leicester factory linked to the company have dogged Boohoo in recent weeks. The imposition of a targeted Covid-19 lockdown in Leicester earlier this month increased scrutiny of the factory’s standards.
The retailer severed relations with Revolution Clothing, which ran the factory in question, and launched an immediate review of its British supply chain. It stated: “We take extremely seriously all allegations of malpractice, poor working conditions and underpayment of workers.”
This reaction was not enough to prevent a slew of online retailers from removing Boohoo products from their sites, most notably Amazon and Asos.
Photographs published over the weekend showing Boohoo’s billionaire co-founder Mahmud Kamani partying with the director of Revolution Clothing did little to mollify investor sentiment.
At the end of last week, Standard Life Aberdeen, Boohoo’s sixth largest shareholder and the largest listed asset manager in the UK sold off all of its shares.
Responding to a Sunday Times investigation, the deputy head of UK equities at SLA’s fund management business stated: “Having spoken to Boohoo’s management team a number of times this week in light of recent concerning allegations, we view their response as inadequate in scope, timeliness and gravity.”
Reacting to the scandal, UK home secretary Priti Patel raised her concern that ‘cultural insensitivities’ may have prevented Britain’s police from addressing illegal sweatshops predominantly staffed by those of South Asian descent.
Andrew Bridgen, the Tory MP for North West Leicestershire, similarly observed: "There has been a total systemic failure by the organisations supposed to protect the public and those who work at these factories. Some of it is down to racial sensitivities."
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