More than £1.5bn has been wiped off boohoo’s valuation after a string of leading retailers dropped its clothes from their websites.
Next and Zalando will no longer sell garments produced by the fast fashion giant following a damning Sunday Times investigation into conditions at a factory where they were packed.
Asos and Very.co.uk have temporarily suspended the sale of boohoo items while an investigation is carried out.
Amazon also released a statement to say it had suspended the sale of boohoo brands. However only a few historical items are listed on Amazon’s fashion site and a representative of boohoo group told BusinessCloud it does not list its products with Amazon and has not done so for several years.
Manchester-headquartered boohoo said it would launch an immediate independent review of its UK supply chain, led by Alison Levitt QC, and invest £10m “to eradicate supply chain malpractice”.
On Wednesday morning boohoo’s market cap stood at £3.2 billion, more than £1.5bn down on last week before the undercover newspaper report was published.
Next’s decision was in response to a report from workers’ rights group Labour Behind the Label. A spokesman said: “Next concluded there is a case for Boohoo Group to answer.
“Next needs to prove to itself the two Boohoo Group labels that it was stocking are being sourced in a manner that is appropriate and acceptable to Next.
“Next therefore has its own investigation under way to ascertain whether they are being made in a way that Next does not approve of.”
The Sunday Times reporter worked for two days at a Leicester factory displaying the sign Jaswal Fashions and was told to expect a wage of £3.50 an hour, despite the minimum wage for those aged 25 and over being £8.72.
Video footage showed him packing garments destined to be sold under the Nasty Gal label, owned by boohoo.
The factory was also working last week despite a full localised COVID-19 lockdown, without additional hygiene or social distancing measures in place.
Garment factories in Leicester are thought to be a leading cause of a recent spike in infections in the area. An estimated three-quarters of clothing made in Leicester are ultimately sold under boohoo brands.
On Wednesday boohoo released a statement highlighting was it claimed are “inaccuracies” in the report.
“The garments featured were not actually manufactured in Leicester, but in Morocco. Post–production, the garments were shipped back to the UK by the supplier to be repackaged into compliant boxes for delivery to the group’s international distribution centre in Burnley,” it read.
“Jaswal Fashions Limited, contrary to the media report, is not and has never been a supplier for the group, and does not operate in the unit stated.”
boohoo also said it would “accelerate” an independent third party supply chain review with ethical audit and compliance specialists Verisio and Bureau Veritas.
It will also recruit two further Non-Executive Directors “to provide an appropriate balance of independent directors on the group’s board”.
John Lyttle, group CEO, commented: “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.
“We want to ensure that the actions of a few do not continue to undermine the excellent work of many suppliers in the area, who succeed in providing good jobs and good working conditions.”
Last month boohoo group reported a 45% increase in group revenue to £367.8m for the three months to May 31st and also acquired the intellectual property of women’s fashion retailers Oasis and Warehouse, both of which went into administration in April.