Boohoo Group plc is a UK-based online fashion retailer, aimed at 16–30 year olds. The business was founded in 2006, and had sales in 2019 of £856.9m. It specialises in own brand fashion clothing, with over 36,000 products. The firm's shares lost 46 per cent of their value my mid-July 2020 after Sunday Times revelations about a supplier's failure to protect workers in Leicester.
History
Boohoo was founded in 2006 by Mahmud Kamani and Carol Kane, who respectively serve as group executive chairman and an executive director and previously supplied high street chains such as Primark and New Look. Boohoo's core products include dresses and tops, with a selection of over 27,000 styles of clothing. Boohoo has been criticised for promoting fast-fashion which critics claim comes at a cost to those making the clothes and the environment. More than half of Boohoo's garments are produced in the UK, especially Leicester, London, and Manchester. Boohoo buys 75%–80% of the clothing produced in Leicester. This was made possible when other retailers such as ASOS reduced the amount they sourced from Leicester over concerns about working conditions. In 2017, Channel 4 documentary Dispatches found that factories in Leicester supplying Boohoo were paying workers less than the minimum wage. Boohoo stated that the work had been subcontracted without their knowledge. During the COVID-19 pandemic, Boohoo reported an increase in sales. In late June, workers' rights group Labour Behind the Label produced a report that stated factories supplying Boohoo were not following to social distancing and forcing employees to work even if sick, claims that Boohoo denied. This was followed by an investigative report by The Sunday Times which found that workers producing clothes for BooHoo were paid £3.50 an hour, less than half the UK minimum wage for over 25s.
Business operations
According to Chief executive Carol Kane, Boohoo can differentiate itself from its closest rivals, as all their clothing ranges are own-branded with average prices of £17 as of 2014 comprising 9000 clothing lines. With a primary focus on the 16–24 year old age group, it sells clothing to over 100 countries and as of 2014 had seven major markets, including the UK, the US, and France. Stock is purchased in small quantities of between 300–500 items at a time, with repeat orders typically of 25% on those that sell well. Customers can order items up to midnight for next-day delivery, including on Sunday. Customer numbers increased by 29% throughout 2016-17, up to 5.8 million. As an online retailer, Boohoo utilise social media as an integral part of their marketing strategy. A social media manager was appointed in 2012, with all employees encouraged to assist the social media team by contributing messages and imagery. boohoo had 6m Instagram followers, 1.1m Twitter followers and 2.9m likes on facebook.
Corporate affairs
Boohoo also owns boohooMAN, PrettyLittleThing, Nasty Gal and MissPap, all targeted at 16–24 year olds. PrettyLittleThing was acquired in December 2016, with the retailer purchasing a 66% stake in the business at a cost of £3.3m, with the existing management team retaining the remaining shares. During the year up to April 2017, customer browsing from mobile devices accounted for 70% of total sessions, an increase of 4% from the previous year, with downloads of its mobile app across the United Kingdom, United States and Australia totalling around 2.2 million.
Financial performance
In the 10 months to December 2013, Boohoo had sales totalling £92m, with a profit before charges of £10m. By February 2014, total sales had reached £110m, with profits of £11m. Turnover in the year to February 2015 was £139.9m, an increase of 27% from the previous year, with an increase of gross profit by 31% to £85m. In April 2017, Boohoo announced that its profits had almost doubled to £31 million on sales up 51% to almost £300 million. When the company was floated on the stock market in 2014, it was valued at £560m, and is worth about £2 billion as of 2017 Internationally, the retailer suggests its 140% growth to revenue of almost £40m has exceeded expectation, whilst growth in Europe was 44% and 42% for the rest of their international operations. Strong performance was reported in April 2018, when Boohoo announced almost double revenue from the previous year, up to £580 million, a pre-tax profit of £43.3 million and a 22 percent increase in customers. Boohoo has continued to experience strong performance with the last four-month period for 2019 experiencing a 44% jump in revenue to £328.2m. During the 2020 COVID-19 pandemic Boohoo was reported to have turned a greater profit than in the previous fiscal year. Euronews Living reported at the time that "Boohoo has managed to capitalise on cosy clothing when its customers need comfort above all else." In June 2020, Boohoo announced that it was to acquire high street chains Oasis and Warehouse for £5.25m, as it revealed a 45% increase in first quarter revenue.
Criticism
In July 2020 Boohoo was accused of sourcing their garments from Leicester's manufacturers who pay less than the minimum wage. Labour Behind the Label also accused Boohoo of sourcing garments from factories that did not protect staff from Covid-19 as well as general poor working conditions at their UK suppliers. Meanwhile, Standard Life Aberdeen, the big asset manager and a top 10 shareholder in the group, announced that it had sold most of its stake in the company a few days after the Sunday Times revelations. SLA said that after engaging with Boohoo's management team a number of times during the week, it found the online retailer's response to the allegations was "inadequate in scope, timeliness and gravity". On 15 July 2020 a British MP said that it was 'shameful' that it took a pandemic for Boohoo to finally be taken to task for its workplace practices. Philip Dunne, chairman of the environmental audit committee, also said that the company had not met a pledge to sign up to the Ethical Trading Initiative which brings together retailers, unions and campaign groups to improve practice in supply chains.
