London (AFP)
Boohoo's action continued to plunge Wednesday, investors turning away from the British clothing group since the publication of press information accusing one of its suppliers of quasi-slavery practices and of having helped to spread the coronavirus.
"The wheel is turning for Boohoo" whose "crisis management fails to end the scandal," said Russ Mold, analyst at broker AJ Bell.
The action tumbled further 14.61% Wednesday late morning and has fallen 42% since the beginning of the week.
"The turnaround is quite spectacular. A few weeks ago everyone praised Boohoo for having managed to develop during the pandemic and his action reached record levels," notes Mr. Mold.
The workers' rights association Labor Behind the Label denounced in a scathing report illegal working conditions and wage levels in the Leicester area where the presence of foci of infection forced the city of central 'England to reconfigure itself.
"How can Boohoo boast a 44% growth in the first quarter (...) despite a pandemic? Workers denounce violations of confinement, frauds in government aid on short work, and modern slavery in the supply chain, "the NGO tweeted on July 1.
Sunday Times article reports journalist who masqueraded as a worker and worked two days at the Jaswal Fashions factory in Leicester was promised wages of £ 3.50 an hour while the minimum wage for an adult over 25 is £ 8.72 in the UK.
The company said it was "horrified" by these allegations and claimed to ignore these practices, promising an investigation for which it hired a renowned quality control expert.
"The market is not convinced, however," says Mold, who argues that "a review of its supply chain should have been done a long time ago since accusations of bad practices among its suppliers date back to 2017 ".
Distributors Next, Asos - also sometimes pinned down for their warehouse practices - or Zalando have announced at least temporarily boycotting Boohoo's products, as have TV stars like Vas J Morgan.
"They react too little and too late," insists Mr. Mold.
"Boohoo is a textbook case of poor ethical practice," says Michael Hewson, analyst at CMC Markets, noting that it invites us to "think about the nature of + fast fashion + and what lies behind the low prices and the buying clothes, wearing them once and throwing them away, which is not very ethical. "
The analyst is also ironic about the double-edged sword of "social networks which can build a brand very quickly with the help of influencers who exhibit the products of a company, but can destroy it as quickly".
© 2020 AFP