Boohoo facing possible US import ban following slave labour allegations
Online fashion giant boohoo is facing a possible US import ban due to allegations over the use of slave labour.
According to a Sky News report, US Customs and Border Protection has seen sufficient evidence to launch an investigation following petitions from Duncan Jepson who runs Liberty Shared, a campaign group against modern day slavery.
Mr Jepson claims Boohoo is not doing enough to stop forced labour in the Leicester factories which make many of its clothes.
He said: “The evidence of Boohoo and forced labour is quite compelling. I think it will be a wake-up call for British institutions about how they’re handling modern slavery enforced labour, particularly in a community like Leicester East.
“What we’d all like, those of us interested in improving labour conditions, is for Boohoo to really get to grips with governance of their supply chain to ensure there is no wage theft and people have proper contracts.
“It must look at all 11 indicators the International Labour Organisation sets out for forced labour and see there is compliance with those.”
Boohoo recently acquired the Debenhams brand and website following its administration for £55m and announced it would take it online only.
Revenues in 2020 rose 40% to £1.235bn, with profits of £92.2m. Sales in the US were £263.6m, more than a fifth of the company’s total revenue.
Last year, an undercover report in the Sunday Times exposed evidence of illegally low wages and poor working conditions in Boohoo’s supply chain in Leicester, where 40% of its clothes were being manufactured.
The government set up a multi-agency task force, including the National Crime Agency, to investigate the claims.
Boohoo also launched an independent review of its UK supply chain led by lawyer Alison Levitt QC.
The review identified many failings in the Leicester supply chain and concluded that while the business had taken steps nearly a year previously these ‘didn’t advance quickly enough.’
“The online fashion retailer Boohoo has been quick to react to media reports that it’s facing the possibility of a US import ban because of allegations over the use of forced labour,” said Danni Hewson, financial analyst at Manchester investment platform AJ Bell.
“The group has said it has ‘not received any correspondence from, nor is it aware of any investigation by, US Customs and Border Protection’. It goes on to talk about the measures it is taking to ensure all its products meet the required standards.
“But these new allegations will hurt the reputation of the business still trying to regain its sparkle after an investigation into its UK suppliers left it with a long to do list.
“And it comes at a particularly crucial time. Our lockdown shopping habits helped sales rocket by 40% last year but the company will be concerned that growth might not be sustainable, particularly when you consider how the spending power of 16-25-year-olds has been affected by the pandemic.
“So, it’s looking to broaden its customer base with the £55m acquisition of Debenhams and several of the Arcadia brands.
“It’s also looking to grow its overseas order books and the US is undoubtedly a vital part of Boohoo’s plans.
“Shares took a tumble this morning, falling more than seven per cent in early trade. Investors will be keeping a close eye on how quickly Boohoo can put this issue to bed once and for all.
“Today’s consumer isn’t just looking for a bargain. They are looking to buy into a lifestyle and social responsibility is part of that.”