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Boohoo founder vows to fix supply chain failings

Kalila Sangster
·3 min read
SYDNEY, AUSTRALIA - NOVEMBER 27: Emma Claire attends the boohoo Black Friday gifting suite on November 27, 2020 in Sydney, Australia. (Photo by Don Arnold/WireImage)
Celebrities attend the boohoo Black Friday gifting suite on 27 November 2020 in Sydney, Australia. Photo: Don Arnold/WireImage

Boohoo’s (BOO.L) co-founder and executive chairman Mahmud Kaman has said he will fix the group’s supply chain failings after a scandal over working conditions and low pay was revealed in July.

“We have made some mistakes but over the last 14 years we’ve got more right than wrong and we’ve a very very fast growing business,” said co-founder Mahmud Kamani as he gave evidence to the UK parliament’s Environmental Audit Committee, which is examining fashion sustainability.

“I’m determined to fix whatever’s gone wrong and I understand things have gone wrong because of the fast growing nature of this business,” he said.

In September, an independent review found “many failings” in the online fashion retailer’s supply chain in England after The Guardian and the Sunday Times exposed poor working conditions and low pay in Leicester factories supplying Boohoo in July.

Boohoo accepted all the recommendations of the review and set out steps to tackle the issues including addressing problems across corporate governance, purchasing practices, supply chain standards, workers' rights, and support for suppliers.

In November, Boohoo appointed retired judge Brian Leveson to independently check its “Agenda for Change” programme which is set up in response to the review.

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READ MORE: Boohoo cofounder sells £10m stake in the business

Kamani said all at the group were “seeking to make a better Boohoo.”

“That’s why we started the Agenda for Change and commissioned Brian Leveson.”

The firm’s co-founder stated “what we are guilty of, if anything” was not developing processes quickly enough to keep up with the group’s growth.

“We recognise in this industry, when we’re dealing with an independent factory who’s not owned by us... some of them don’t play with a straight bat as it were. But we try our best to make good,” he said.

Andrew Reaney, responsible sourcing and product operations director for Boohoo, told the committee that over the last year the firm had terminated relationships with 64 suppliers and factories in Leicester for violating its code of conduct.

Boohoo’s share price was up 5% in London on Thursday morning.

Yahoo Finance UK
Chart: Yahoo Finance UK

Boohoo was co-founded by Kamani and co-CEO Carol Kane in 2006. The fast-growing retailer, which targets 16- to 40-year-old women, listed on London's AIM stock exchange in 2014.

In September, Kane sold £10.6m ($14.4m) worth of shares in the business, retaining a 4% stake.

The firm was dealt another blow in October when accountancy company PricewaterhouseCoopers (PwC) stepped down as Boohoo’s official auditor.

Despite the supply chain scandal, sales and profits continued to rise at online fast fashion retailer in 2020, with half-year results showing booming revenue and profits in September. Boohoo said that sales jumped by 106% in the first six months of the year, while pre-tax profits climbed by 41%.

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