UK online fashion retailer Boohoo defends supplier treatment after BBC probe

LONDON (Reuters) – British online fashion retailer Boohoo defended its treatment of suppliers on Monday after the BBC said it had seen evidence of staff pressuring suppliers to drive prices down, even after deals had been agreed.

BBC Television conducted an investigation with an undercover reporter, who worked for 10 weeks at Boohoo’s head office in Manchester as an administrative assistant.

“Like all businesses, we have experienced significant cost inflation over the last year, which we have absorbed in order to maintain affordable prices for customers,” a spokesperson for Boohoo said in a statement.

“As the cost of raw materials, freight and energy started to come down, the Group asked its suppliers to reflect this in their pricing through discounts of between 1 and 10%, and we passed the savings onto customers,” the spokesperson said.

In 2020, Boohoo accepted all the recommendations of an independent review that found major failings in its supply chain in England after newspaper allegations about working conditions and low pay in factories in the Leicester area.

It pledged to fix the problems with its “Agenda for Change” programme.

“Boohoo has not shied away from dealing with the problems of the past and we have invested significant time, effort and resource into driving positive change across every aspect of our business and supply chain,” the spokesperson said.

Boohoo had made a number of improvements, including strengthening the ethical and compliance obligations on those wishing to supply Boohoo and regularly publishing a full list of approved global manufacturers.

“The action we’ve taken has already delivered significant change and we will continue to deliver on the commitments we’ve made,” the spokesperson said.

Boohoo and rival ASOS grew rapidly during the pandemic when high street rivals were shuttered by lockdowns.

But supply chain issues, higher product returns, competition from rivals like Shein and rapidly rising living costs hit them hard.

Both Boohoo and ASOS have warned on the outlook in recent weeks.

Shares in Boohoo, 16.5% of which are owned by Mike Ashley’s Frasers, fell as much as 2.6% before paring losses to stand 0.8% lower at 1039 GMT, extending a decline over the last year to 28%.

(Reporting by James Davey; Editing by Kirsten Donovan)