TIDMBOO
RNS Number : 3701S
boohoo group plc
08 July 2020
For Immediate Release 8 July 2020
The information contained within this announcement is deemed by
the company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
boohoo group plc
("boohoo" or "the Group")
Independent review of UK supply chain
As a board, we are shocked and appalled by the recent
allegations that have been made and we are committed to doing
everything in our power to rebuild the reputation of the textile
manufacturing industry in Leicester. We want to ensure that the
actions of a few do not continue to undermine the excellent work of
many suppliers in the area, who succeed in providing good jobs and
good working conditions. To support this, we are:
-- launching an immediate independent review of our UK supply chain, led by Alison Levitt QC
-- making an initial commitment to invest an incremental GBP10
million to eradicate supply chain malpractice
-- accelerating our independent third party supply chain review
with ethical audit and compliance specialists, Verisio and Bureau
Veritas
We take extremely seriously all allegations of malpractice, poor
working conditions, and underpayment of workers. The Group will not
tolerate any incidence of non-compliance with its Code of Conduct
or any mistreatment of workers, and will not hesitate to terminate
relationships with any supplier who does not comply.
We would welcome the opportunity to work with the Home Secretary
and the local authority on any future investigations to help
eliminate any instances of labour malpractice in Leicester.
Update on investigation into media commentary
As soon as the Group was made aware of the allegations of
mistreatment of garment workers by our third party suppliers, as
detailed in the 6 July announcement, an immediate investigation was
launched.
Our findings show some inaccuracies with last Sunday's media
report. The garments featured were not actually manufactured in
Leicester, but in Morocco. Post production, the garments were
shipped back to the UK by the supplier to be repackaged into
compliant boxes for delivery to the Group's international
distribution centre in Burnley. This was the process that was
filmed at a premises formerly operated by Jaswal Fashions
Limited.
Jaswal Fashions Limited, contrary to the media report, is not
and has never been a supplier for the Group, and does not operate
in the unit stated. Investigations over the last 72 hours have
highlighted that the order from Nasty Gal was placed with
Revolution Clothing Co Limited, who then instructed Morefray
Limited to manufacture in Morocco and repackage the garments on
their behalf in Leicester.
Our investigation to date has not found evidence of suppliers
paying workers GBP3.50 per hour. However we have found other
evidence of non-compliance with our Code of Conduct and the Group
has taken the decision to immediately terminate its relationship
with both suppliers.
Our commitment to UK manufacturing
boohoo supports UK manufacturing and the British fashion
industry. boohoo does not own or operate any manufacturing
facilities. We have a global and flexible supply chain and at this
time around 40% of the products that we sell are manufactured in
the UK, supporting thousands of jobs in this country that may
otherwise be lost to overseas markets. Producing garments in the UK
does not bring a cost advantage for the Group. We produce garments
in the UK because of its proximity to our international
distribution centres, giving the Group additional flexibility to
react to the latest trends for our customers. The Group is wholly
committed to continuing to have garments manufactured in the UK and
we will develop initiatives to further support our suppliers.
Since the onset of the COVID-19 pandemic, we have stood side by
side with our manufacturers, continuing to pay them promptly with
our industry-leading 14-day payment terms for all of their orders.
During this period, the Group has not taken advantage of any of the
financial support that has been made available by the UK Government
in either grant or loan form.
Supplier auditing procedures
We monitor our UK suppliers through a dedicated in-house
compliance team who are responsible for co-ordinating our supplier
compliance programme. In 2016, we established an on the ground
compliance team in Leicester who carry out regular unscheduled
inspections against our Code of Conduct so as to ensure adequate
standards are maintained in the supply chain.
In late 2019, we supplemented our team by funding an additional
third-party audit programme, with ethical audit specialist,
Verisio. We are working together to further improve the
transparency of our supply chain compliance, including our tracking
and auditing practice. This comprehensive review commenced in May
2020, and is focusing on all of our UK suppliers, and their
subcontractors, with unannounced audit visits to all of their
facilities. As part of this review, all of our suppliers are
required to acknowledge their compliance with the Group's updated
Code of Conduct and to provide full disclosure of their own sites
as well as details of any locations where work is subcontracted.
Non-compliance with this programme will not be tolerated and we are
committed to working with the relevant local and national
authorities.
Immediate independent review of UK supply chain
Today the Group has launched an independent review of its UK
supply chain. The objective of the review is to identify areas of
risk and non-compliance, take action to strengthen future
compliance, and to provide stakeholders with comfort that similar
allegations will not recur in the future.
The review will be led by Alison Levitt QC with boohoo board
representation from Brian Small, the Group's Deputy Chairman and
Senior Independent Director.
It will focus on reviewing our UK supply chain,
prioritising:
-- Supplier compliance with minimum wage regulations
-- Compliance with COVID-19 regulations
-- Working hours and record keeping
-- Right to work documentation and contracts of employment
As part of this review, the Group has retained additional
services of compliance specialists, Bureau Veritas. This
appointment will provide additional capacity to accelerate the
review that is already underway with Verisio.
Timeline for communication
We are committed to providing our stakeholders with regular and
informative updates on our supply chain initiatives in order to
give as much transparency into our review as possible, with an
indicative timetable outlined below.
Late July 2020
-- Publication of Terms of Reference for the independent review
September 2020
-- Update on supply chain review and Half Year results
January 2021
-- Update on supply chain review and publication of the Group's peak trading performance
April / May 2021
-- Update on Sustainability and publication of the Group's Full Year Results
May / June 2021
-- Publication of the Group's Annual Report and Accounts,
including dedicated Sustainability Report
Board composition and governance
The Group currently has a PLC board comprising three
Non-Executive Directors, and four Executive Directors. The Group is
currently in the process of recruiting two additional Non-Executive
Directors to provide an appropriate balance of independent
Directors on the Group's board. Consideration will be given to
experience in dealing with Environmental, Social and Governance
(ESG) matters as part of the recruitment process.
Update on wholesale operations
The Group has a relatively small wholesale operation with almost
all of our revenues coming from our own brand websites. In the last
financial year, wholesale accounted for less than 4% of the Group's
turnover, as we increased our focus on our direct to consumer
proposition. In the first four months of the current financial
year, wholesale accounted for just 1.4% of the Group's
turnover.
Sustainable and agile business model
As a Group we have a flexible and diverse global supply chain,
which has adapted extremely well to our test and repeat model, with
60% of our products manufactured in overseas markets. We will
continue to develop our international supply chain and invest in
high quality UK manufacturers. We are therefore confident in our
ability to maintain our sustainable business model that can create
value for all stakeholders.
John Lyttle, Group CEO, commented:
"As a board we are deeply shocked by the recent allegations
about the Leicester garment industry. We wish to reiterate how
seriously we are taking these matters and we will not hesitate to
terminate any relationships where non-compliance with our Code of
Conduct is found. Our commitment to an incremental GBP10 million of
investment demonstrates our resolve to enforce the highest
standards of ethics, compliance and transparency for the benefit of
all garment workers. We look forward to regularly updating our
stakeholders as we move through this process."
-ends-
Enquiries
boohoo group plc
Neil Catto, Chief Financial Officer Tel: +44 (0)161 233
2050
Alistair Davies, Investor Relations Tel: +44 (0)161 233
2050
Clara Melia, Investor Relations Tel: +44 (0)20 3289
5520
Zeus Capital - Nominated adviser and joint
broker
Nick Cowles/Andrew Jones (Corporate Finance) Tel: +44 (0)161 831
1512
John Goold/Benjamin Robertson (Corporate Tel: +44 (0)20 3829
Broking) 5000
Jefferies - Joint broker
Philip Noblet/Max Jones Tel: +44 (0)20 7029
8000
Buchanan - Financial PR adviser boohoo@buchanan.uk.com
Richard Oldworth/Kim Looringh-van Beeck/Toto Tel: +44 (0)20 7466
Berger 5000
Notes
About Alison Levitt QC
Alison Levitt QC returned to full-time advocacy practice after 5
years in the public service. From 2009-2014 Alison was the
Principal Legal Advisor to the DPP and later was head-hunted by
Mishcon de Reya to establish their White Collar Crime and
Investigations department.
She provides advocacy in crime including business crime, and in
cases with significant foreign and/or public policy elements.
She has prepared independent reports on many complex issues, and
has carried out two recent safeguarding Inquiries.
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and
innovative brand targeting young, value-orientated customers. Since
2006, boohoo has been pushing boundaries to bring its customers
up-to-date and inspirational fashion, 24/7. boohoo has grown
rapidly in the UK and internationally, expanding its offering with
range extensions into menswear, through boohooMAN.
In early 2017 the group extended its customer offering through
the acquisitions of the vibrant fashion brand PrettyLittleThing,
and free-thinking brand Nasty Gal. In March 2019 the group acquired
the MissPap brand, in August 2019 the Karen Millen and Coast
brands, and in June 2020 the Warehouse and Oasis brands, all
complementary to the group's scalable multi-brand platform. United
by a shared customer value proposition, our brands design, source,
market and sell great quality clothes, shoes and accessories at
unbeatable prices. These investment propositions have helped us
grow from a single brand, into a major multi-brand online retailer,
leading the fashion eCommerce market for 16 to 40-year-olds around
the world. As at 29 February 2020, the boohoo group had just under
14 million active customers across all its brands around the
world.
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