Boohoo booms as Leicester garment factories are linked to lockdown

4 July 2020 | Finance

On 27 March, even as the rest of the UK were trying to make sense of how to get through the coronavirus crisis, Boohoo seemed to have nailed it.

It was a Friday, and usually the fast-fashion brand’s irrepressibly bouncy Twitter account would be pitching dresses and shoes to its followers ahead of a night out. But this was the first weekend of lockdown, and the company made a decisive pivot.

Instead of bandage tops and tapered trousers, it posted a “night in” thread, helping followers choose “that perfect movie for the weekend”. It advertised an everything-must-go flash sale, with 70% off all stock and 50% off 500 dresses.

And it started selling loungewear – that is, clothes for the sofa. A knitted lounge set, a cropped sweatshirt, and “Disney+ binge outfits” were all on show. “Honey,” Boohoo told its half million followers, “you NEED these PJs.”

boohoo (@boohoo)

Honey, you NEED these PJ’s ☁️✨

PJ SET https://t.co/gZzGungn2t

📸 yourlu pic.twitter.com/WaUZ9NZQPA

March 27, 2020

The strategy – clear out the old stock and bring in a whole new line at a speed that astonished industry insiders and supply chain experts and left rivals in its wake – worked.

A few weeks later, the company announced that it had not only survived the first weeks of the crisis, but increased its April sales against the previous year.

Announcing pretax profits of £92.2m for 2019-20, the chief executive, John Lyttle, noted that the crisis had highlighted the company’s “ability to be agile and flexible”.

The co-founder and executive director, Carol Kane, told Drapers magazine “we’ve made sure we have had appropriate inventory for working from home and comfy items” by “working with our supply base to swap inventory around”.

That meant relying on the rapid work of suppliers in Leicester – “the bedrock of Boohoo’s success”, according to one industry source. Estimates suggest that 75%-80% of the city’s garment output is sold to the company.

Amid the quarantine gloom, it was a British coronavirus success story.

In Leicester this week, however, a very different lockdown narrative was unfolding, of a city that had failed to keep the virus under control and was facing new local restrictions.

In the days after the health secretary, Matt Hancock, announced that Leicester would be excluded from this weekend’s wider reopening in England, a number of explanations arose: central government’s failure to provide local authorities with the relevant data, overcrowded housing, and problems in communication with with those in the large Gujarati community who had limited English and no access to TV or a smartphone.

Then another possible factor emerged: the virus appears to have taken hold in a number of Leicester’s factories and workshops – and in some cases those places never closed.

“I’m not surprised, but I am worried,” said the Labour councillor Mustafa Malik. “They may be part of the problem.” He cautioned that it was not yet possible to be sure which factors would prove to have been most significant.

But he added: “Certainly, there are factories that abided by the rules and regulations, but there were some which were just breaching all those rules, and the question is: at what level?”

The city’s garment manufacturing base has long been criticised for poor working conditions and low pay.

After the campaign group Labour Behind the Label this week published workers’ claims of being asked to keep working despite coronavirus outbreaks on site, an industry source provided the Guardian with a list of more than a dozen suppliers which they alleged sold to Boohoo and continued to operate during the crisis despite infected workers being on site.

Two community sources who were consulted about the list said it was corroborated by information from whistleblowers.

Boohoo previously said none of its suppliers had been affected. On Friday, it did not respond directly to the claims when asked for comment by the Guardian, but said it was “working with our third-party compliance partner to further investigate the claims raised and are working with suppliers to ensure compliance”.

Some factory bosses dismissed the idea that any such problem arose. “Everything has been fine here,” one told the Guardian outside his workshop on Wednesday. “You have to understand, when this city locked down, everything stopped. Our workers’ health is the most important thing.” He declined a request for a tour of his operation, or to say which company he sold to.

Boohoo has said “production deadlines have been more flexible” as a result of the crisis and they have been agreed on a “case by case basis”. It said it monitored sites remotely via video and audio calls, and provided personal protective equipment and hygiene products free of charge.

Meanwhile, the Health and Safety Executive said it had contacted 17 textile businesses in Leicester, was actively investigating three, and taking enforcement action against one.

HSE would not say which sites it was looking at, and Boohoo said it was “unable to confirm” whether any of its suppliers were under investigation.

Dominique Muller, the author of the Labour Behind the Label report, said: “Boohoo’s broader problem here is very familiar.” She said if any investigation found that its suppliers played a role in the spread of the coronavirus, it could raise difficult issues for the company.

Leicester has a long history of clothing manufacture, but Boohoo’s dominance is relatively new. The company, founded by Carol Kane and Mahmud Kamani in 2006, significantly increased its share of the city’s output after rivals, including Missguided and Asos, were put off by concerns about conditions in some of Leicester’s factories – including claims over conditions of modern slavery, illegally low wages, VAT fraud and inadequate safety measures – and sought suppliers elsewhere.

Mahmud Kamani and Carol Kane

Mahmud Kamani and Carol Kane attending a Boohoo collection launch in 2018. Photograph: Jerritt Clark/Getty Images/boohoo

Those concerns have continued, recently being raised in parliament by the Conservative MP Andrew Bridgen, who called the issue a “national shame”. Nonetheless, sticking with Leicester appears to have helped Boohoo with its speed to market, which helped it weather the beginning of the pandemic – and made it the envy of industry rivals.

“Boohoo can get from concept to market in about two weeks, which is incredibly fast,” said Aneesha Sherman, an industry analyst at Bernstein. “They prefer UK local producers because they can make it within days and get it back to them. That is a huge advantage over slower retailers.”

However, critics allege that the company’s speed is not merely due to geography. “There is simply no way that they can be buying things at the prices that they are and getting them at the pace that they are” while ensuring adherence to ethical conditions and pay, one industry source suggested. “It’s not that they actively make them do it.”

Boohoo said: “In addition to our ongoing in-house audit programme, we have invested heavily in a bespoke third-party-led compliance programme with compliance specialists who audit all suppliers on both an announced and unannounced basis.”

Thulsi Narayanasamy, a labour rights researcher at the Business and Human Rights Centre (BHRC), went inside Leicester garment factories earlier this year. “I’ve been inside garment factories in Bangladesh, China and Sri Lanka, and I can honestly say that what I saw in the middle of the UK was worse than anything I’ve witnessed overseas,” she said, describing squalid conditions with boarded windows, cramped workers and blocked fire escapes.

On the streets around St Saviours Road, the centre of Leicester’s garment industry and also close to the centre of the coronavirus resurgence, some of the buildings that house the factories are in dire condition. The workers who sometimes emerge, though, are strikingly reticent. A number approached by the Guardian were reluctant to describe their workplace conditions, while other inquiries via community groups and campaigners were also rebuffed. MPs have also struggled to get answers.

“People aren’t members of unions, so that makes it harder,” said Liz Kendall, the Labour MP for Leicester West. “And in terms of going in and inspecting, we know that HSE and other have had their budgets cut, so they only go in if they’re aware there’s a problem – but people don’t come forward if they’ve got a problem if they’re worried about being sacked.”

More willing to talk are those at the other end of the spectrum. Usman Karbhari and his son, Mohamed, run Top Fashion, which provides clothes for Missguided. Initially reluctant to speak, Usman said: “We’ve already read too much in the Guardian. We try our best to follow the government rules.”

But then he relented and led the way into the family factory, where workers are well spaced out and foot-operated hand sanitiser pumps provided by Missguided are visible everywhere. “We are very behind with our orders, but they’re not forcing us,” he said.

Mohamed reflected on an earlier era, when bigger high street brands, such as Primark and Asda, bought clothes from Leicester. “We wouldn’t have entertained the online companies at all,” he said. “They don’t want to pay the prices. But with Missguided, they work towards us and we work towards them.”

Meanwhile, even if it finds itself caught up in a controversy, Boohoo remains as agile as ever.

This week, ahead of Saturday’s wider reopening for most of England – if not for Leicester – it was pitching its customers high heels, bodycon dresses and crop tops, pivoting perfectly to the new demands of the moment. “I don’t think anything will ever slow them down,” said the industry source. “They’re just relentless.”

archie.bland@theguardian.com

Additional reporting: Kev Mud

This post has originally been featured in Guardian.