Boohoo faces potential US import ban over slave labour allegations

Fast fashion retailer’s shares tumble after reports of investigation into labour abuse allegations

The firm said it was not aware of any investigations by American customs officials and that it was continuing to fulfil US orders (Reuters)

Boohoo faces a possible ban on importing its goods into the US following allegations of slave labour at some of the fast fashion retailer’s suppliers.

Boohoo said it was not aware of any investigations by American customs officials and that it was continuing to fulfil US orders.

Analysts warned that the latest controversy could be damaging for Boohoo which generated more than a fifth of its sales in the US last year. Shares in the company fell more than 5 per cent on Tuesday.

Sky News reported that US authorities had seen enough evidence from campaigners that Boohoo was using forced labour in it supply chain.

Duncan Jepson, a lawyer who runs campaigning organisation Liberty Shared, told Sky there was "compelling" evidence of labour abuses at companies selling goods to Boohoo.

In a statement, Boohoo said: "The group has not received any correspondence from, nor is it aware of any investigation by, US Customs and Border Protection.

"Over the past eight months the group has been working closely with UK enforcement bodies.

"If the group were to discover any suggestion of modern-day slavery it would immediately disclose this to the relevant authorities."

Last year an independent review concluded that Boohoo’s senior directors knew “for a fact” that there were “serious issues” with the treatment of workers in the company’s Leicester factories since at least December 2019.

Lawyer Alison Levitt QC, who was hired by the company to review its practices following allegations of labour violations, said she found the reports of poor working conditions and low rates of pay at the garment factories to be “substantially true”.

However, Ms Levitt said she found no evidence that Boohoo or its officers committed any criminal offences.

"From, at the very latest, December 2019, senior Boohoo directors knew for a fact that there were very serious issues about the treatment of factory workers in Leicester," Ms Levitt said.

"Whilst it put in place a programme intended to remedy this, it did not move quickly enough," she added.

The UK investigation prompted auditor PwC to terminate its relationship with Boohoo but it has had little apparent effect on booming sales.

The fresh allegations could hurt Boohoo, said Danni Hewson, financial analyst at AJ Bell.

“It comes at a particularly crucial time," Ms Hewson said. "Our lockdown shopping habits helped Boohoo's sales rocket by 40 per cent 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.

“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.”