Boohoo Shares are Taking A Turn

After meeting a peak 44% revenue growth early this year at $1.52 billion Boohoo’s consistent and seemingly exponential growth is stuttering. Their anticipated year-on-year growth before the COVID-19 pandemic was set to continue, but, as Boohoo CEO John Lyttle puts it, “recent events have understandably overshadowed what has been a great year for Boohoo.” Most would expect a hit on mid to high level priced goods amidst a financial crisis, and not from a fast-growing affordable e-tailer like Boohoo. However, the pandemic might have been the least of Boohoo’s worries. 

Growing concern for the treatment of garment and factory workers in the fashion industry has made headlines here and there over the years. However, with all attention on brands hyper-focused amidst the pandemic, there has never been a time in which so much attention has been garnered to actually accomplish change. In 2017, a documentary called Dispatches uncovered factories supplying Boohoo merchandise paying their workers minimum wage, and in 2018, a Financial Times investigation uncovered further labor exploitation.

The rise of social media activism and real social pressure on brands exploded amidst the Black Lives Matter protests in the month of June. At its height, nearly every brand was called-out and expected to explain their ethical behaviors. Boohoo didn’t escape this treatment, and finally severed ties with suppliers holding sweatshop allegations. Due to the allegation charges and their new supply chain restructure, shares sank this week by as much as 17%. As investigations on sweatshop allegations continue, the trend continues for the pressure on fast fashion brands to further release their practices.

By: Adi Shoham

IG: @adiblossom