The Boohoo Disaster, Explained

Until recently, Boohoo was one of the fastest growing online retailers in Britain. The company is known for its $ 6 bikinis, skintight mini dresses and collaborations with social media and reality TV stars like the Kardashian sisters and “Love Island” personalities.

But this week Boohoo became the newest face of worker exploitation, after revelations about conditions in the factories that make its clothes.

Here, some background.

What’s Boohoo?

Started by Mahmud Kamani and Carol Kane in 2006, Boohoo was a pioneer of the ultra-fast-fashion retail phenomenon, geared toward young women and powered by social commerce, offering cheap fashion products designed to be browsed, bought and worn on social media.

Worth more than big names like Marks & Spencer and Asos combined, the company’s brands include Nasty Gal, PrettyLittleThing, MissPap and BoohooMAN, among others.

Who are the founders?

Mr. Kamani, 55, is a billionaire and Britain’s new king of cheap fashion, after the downfall of Topshop’s Sir Philip Green. A onetime garment supplier to market traders and later a fashion wholesaler, Mr. Kamani spotted opportunity in selling cheap clothes online and without a middleman, setting up shop with Ms. Kane, who started out as a designer, in Manchester.

Press shy, he is the group executive chairman of the Boohoo Group, while Ms. Kane is creative director. The company rarely responds to requests for interviews from the news media.

Credit…Jerritt Clark/Getty Images for Bohooo

Mr. Kamani’s son Umar, 32, is less low-key and also a key figure at the group. Alongside his brothers Adam, 31, and Samir, 24, he founded PrettyLittleThing in 2012, targeted to young millennials, with designs frequently worn by pop bands like Little Mix.

The Boohoo Group bought a 34 percent stake in PLT for 269.8 million pounds (about $ 339 million) in May from Umar, and it is seen as the jewel in the company crown. The society magazine Tatler named Umar its eighth most eligible bachelor for 2019, and he is frequently pictured on social media hobnobbing with the likes of Jennifer Lopez, Megan Thee Stallion and Kylie Jenner. He has almost 800,000 followers on Instagram.

Adam Kamani is now in the property business. Samir Kamani is the boss of BoohooMAN.

What’s ultra-fast fashion? Is that different from fast fashion?

Yes. Ultra-fast-fashion players like Boohoo and Fashion Nova have emerged from, and adapted to, fashion trends driven primarily by social media. They have few or no bricks-and-mortar stores. And they cater to the Instagram and TikTok generation that wants to buy today what their favorite celebrity or influencer wore yesterday, and will post about their new purchases online.

Fulfilling these shoppers’ relentless demands for new products as quickly as possible means working with factories close to home, which is why Fashion Nova sources a significant proportion of its collections from Los Angeles, and Boohoo from Leicester, England.

More established fast fashion retailers like Zara and H&M tend to source from developing markets, and came under increasing public pressure to investigate, police and invest in the factories that make their products after the Rana Plaza disaster in 2013.

But newer, ultra-fast-fashion retailers have encountered a little less scrutiny thanks to a younger customer base and keeping discussion of their business practices out of the limelight.

They introduce new trends every week, and are just as likely to be influenced by the clothes from a reality TV show as the clothes from the runways of New York or Paris. Prices can be even lower than fast fashion or the high street, with $ 5 bikinis and $ 15 dresses, and come with next-day delivery. Often, they will be discarded after a single wear.

Are people still buying even today?

It is a slick business model that has made ultra-fast-fashion retailers a force to be reckoned with even in a pandemic. Boohoo sales grew by 45 percent to £367.8 million, or $ 462 million, in their first quarter of this year, according to the company. Boohoo also recently bought up a number of British high street stalwarts that were on the brink of bankruptcy, including Warehouse and Karen Millen.

In June, the company board approved a package that would pay up to £150 million to the company’s founders and to Mr. Kamani’s son Samir Kamani, of BoohooMAN, if they could increase Boohoo’s value by two-thirds in three years.

Credit…Craig Barritt/Getty Images for Boohoo

OK, so what happened?

On Sunday, a British newspaper called The Sunday Times published an undercover investigation that said workers in a factory in Leicester that supplied Boohoo were being paid as little as £3.50, or $ 4.40, an hour. (The national living wage in Britain for ages 25 and above is £8.72, or $ 10.93). The article also said that workers were working without proper equipment to protect against the coronavirus.

The article came several days after a report published by Labor Behind the Label, a garment worker campaign group, that said that multiple garment factories in Leicester, including other Boohoo suppliers, “were putting workers at risk of infection,” with little or no social distancing or personal protective equipment requirements and low pay during lockdown.

Leicester was the first place in Britain to have local restrictions enforced last week to tackle a surge in coronavirus cases, which may be linked to working conditions in its factories that supply fast fashion retailers.

The town, which has a large South Asian immigrant population, has long been a center for clothes manufacturing. Its dark factories have been described as an “open secret,” well known in both the industry and government, and were documented in a Financial Times investigation published in 2018.

What did the company say?

Boohoo told The Sunday Times that it was investigating the claims and that the factory in the story, Jaswal Fashions, was not a direct supplier. It also said that it would terminate its relationship with any suppliers that were found in breach of its code of conduct.

On Wednesday, the company published a further statement on its website, saying it would begin an independent review of its British supply chain, invest $ 12.5 million in “eradicating malpractice” in any supplier factories and step up its use of third party auditors.

“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,” the Boohoo statement said.

The company said it would report on its supply chain review in September, when it publishes its half-year results, with further updates in January 2021.

What was the reaction?

Between the infections spike in Leicester and the fact that the allegations involved British factories, the impact of the week’s revelations about Boohoo has been considerably larger than most fashion supply chain investigations. The increase in infections and the new information have prompted both a government response and volatility in the stock market.

Priti Patel, Britain’s home secretary, described the allegations as “truly appalling” and asked the National Crime Agency to investigate “modern slavery” in Leicester’s clothing factories.

This week Boohoo’s market value plunged by more than £1.5 billion, or $ 1.89 billion, in two days. Boohoo is now worth a third less than it was on Friday afternoon, before the supply chain allegations wiped more than £1.5 billion off its stock market value. Some retailers, including Next, Zalando and Amazon, say they plan to pull Boohoo clothing from their sites.

How did customers respond?

There was a considerable reaction on social media, led by several influencers who had formerly been faces of Boohoo brands. The company has 12 million Instagram followers and spent more than £90 million on marketing last year.

In an Instagram post, Vas J Morgan, a former collaborator, said: “Slavery is slavery and my heart hurts for the families that have suffered at the hands of companies that fail to do due diligence like this. Companies that make billions off the back of hard working people trying to feed their family.”

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