Boohoo shares dropped 30% over two days after reports emerged about the fast-fashion retailer’s appalling conditions for its factory workers.
Britain’s fastest-growing online clothing retailer saw £1 billion ($1.25 billion) wiped off from its market value as investors reacted to an explosive Sunday Times report that detailed its workers were being paid illegally low wages and worked in “totally unacceptable” conditions.
Boohoo shares fell as much as 14% on Tuesday in intraday trading from £296.70 ($370) to £255.04 ($318) a share. By around 11.30 a.m. UK time (6.30 a.m. ET), the stock had bounced a little and was trading around 6% lower.
The retailer’s shares are still listed on the Alternative Investment Market (AIM), which is generally less liquid and far more volatile than the UK’s larger cap stock indexes like the FTSE 100 and FTSE 250.
The significant drop in shares came after Boohoo admitted that working conditions in a garment-manufacturing factory located in the city of Leicester fell “woefully short of any standards acceptable in any workplace.”
A Sunday Times investigation found that its workers were paid as little as £3.50 ($4.37) an hour. That is far lower than the UK national minimum wage requirement of £8.72 ($10.88) an hour.
In a statement released Monday, Boohoo said it was “grateful” for the conditions highlighted at its factory named in the investigation, Jaswal Fashions.
The company claimed that Jaswal Fashions is “not a declared supplier and is also no longer trading as a garment manufacturer.”
It “appears that a different company is using Jaswal’s former premises and we are currently trying to establish the identity of this company,” Boohoo said.
The retail brand, which owns Pretty Little Thing, Karen Millen, and Nasty Gal, has come under fire ever since a report from a workers’ rights group surfaced about Boohoo allegedly putting workers at risk of contracting Covid-19 at its Leicester factories.
New cases spiked in the city last week, and the UK government reimposed a stricter lockdown than for the rest of England.