Fast Fashion Group Boohoo Accused Of Violating Labor Rights!

Fast fashion retailers are being criticized for the negative social and environmental impact behind their low-cost, high-volume operation mode, but their product portfolio is still very attractive to consumers and investors.

In early July, the stock price of fast fashion group boohoo was close to an all-time high. Then there was the scandal: the company was suspected of violating labor rights and was involved in charges related to the outbreak in Leicester, UK.

The financial impact of the news was rapid and brutal. Last month, boohoo's share price fell nearly 35%. From the platform, including the retailer of the next. Aberdeen standard investments, one of the company's largest investors, sold its shares.

Fast fashion is facing increasing scrutiny, and consumers, investors and regulators are criticizing the social and environmental impact behind low-cost, high-volume retailers. In the past few months alone, companies such as ASOs and Amazon have been ousted by unions for failing to create a safe and hygienic working environment in their warehouses. Brands such as Primark and Urban Outfitters are strongly opposed by the public for not paying their suppliers in full. They also sparked a global campaign called payup to urge brands to deliver on time.

But the performance of these companies doesn't seem to be affected to a certain extent by the anger consumers show on social media.

Sales of ASOs increased by 10% during the outbreak compared with the same period last year. Up to 100 consumers were waiting outside the UK on June 15 when Primark reopened. Boohoo is also showing signs of recovery, although its share price is still below its all-time high on June 17, the company's share price has begun to pick up at the end of July.

The scandal that boohoo was exposed reflects the negative phenomenon that has been lingering in the fashion industry for many years. This is a deep violation of human rights and has also affected the spread of the epidemic. According to a statement released on 8 July, it has conducted an independent investigation into the supply chain and manufacturers and has committed to spend 10 million pounds to eradicate such violations. But on the other hand, a $5 dress is still attractive to many consumers.

Convenient and affordable

In fact, the epidemic may help to deepen the influence of affordable fashion, especially for e-commerce platforms with attractive advertisements, frequent discounts and easy to buy. With the U.S. in recession and unemployment at an all-time high, financial distress may increase consumers' attention to prices, rather than environmental and social factors.

Even before the outbreak, consumers expressed interest in sustainability only to a certain extent affected their actual purchasing behavior. In the fashion industry trends in 2019 released by the global fashion agenda, only 7% of consumers said that sustainability was a key determinant of their purchase. The survey found that quality, value for money, and whether an item makes a person look like a winner are more important.

"I don't think the boohoo scandal will necessarily affect the whole industry," said aneesha Sherman, an analyst at Bernstein. "It doesn't negate the whole fast fashion industry."

To be sure, fashion companies without a strong online business will be severely hit by the blockade, but the sales growth of major e-commerce players is extremely rapid. After the recent scandal, some investors in boohoo have even increased their investment in the company. Jupiter asset management, its largest independent shareholder, increased its stake from 9.6 per cent to 10.1 per cent, a spokesman said the company saw an opportunity from a weak share price and was continuing to follow up supply chain investigations with boohoo.

Adam Cochrane, an analyst at Citibank, estimates that the company will successfully recover half of its share price decline in the short term as the market begins to realize that the scandal has not had a material impact on boohoo's sales.

Fast fashion retailers are being criticized for the negative social and environmental impact behind their low-cost, high-volume operation mode, but their product portfolio is still very attractive to consumers and investors.

London, UK – in early July, the share price of fast fashion group boohoo was close to an all-time high. The company was involved in the scandal and was accused of infringement of the rights of Leicester.

The financial impact of the news was rapid and brutal. Last month, boohoo's share price fell nearly 35%. Retailers including next, ASOs and zalando have taken the brand off their platforms. Aberdeen standard investments, one of the company's largest investors, sold its shares.

Fast fashion is facing increasing scrutiny, and consumers, investors and regulators are criticizing the social and environmental impact behind low-cost, high-volume retailers. In the past few months alone, companies such as ASOs and Amazon have been ousted by unions for failing to create a safe and hygienic working environment in their warehouses. Brands such as Primark and Urban Outfitters are strongly opposed by the public for not paying their suppliers in full. They also sparked a global campaign called payup to urge brands to deliver on time.

But the performance of these companies doesn't seem to be affected to a certain extent by the anger consumers show on social media.

Sales of ASOs increased by 10% during the outbreak compared with the same period last year. When Primark's UK store reopened on June 15, as many as 100 consumers queued outside. Boohoo is also showing signs of recovery, although its share price is still below its all-time high on June 17, the company's share price has begun to pick up at the end of July.

The scandal that boohoo was exposed reflects the negative phenomenon that has been lingering in the fashion industry for many years. This is a deep violation of human rights and has also affected the spread of the epidemic. According to a statement released on 8 July, it has conducted an independent investigation into the supply chain and manufacturers and has committed to spend 10 million pounds to eradicate such violations. But on the other hand, a $5 dress is still attractive to many consumers.

Convenient and affordable

In fact, the epidemic may help to deepen the influence of affordable fashion, especially for e-commerce platforms with attractive advertisements, frequent discounts and easy to buy. With the U.S. in recession and unemployment at an all-time high, financial distress may increase consumers' attention to prices, rather than environmental and social factors.

Even before the outbreak, consumers expressed interest in sustainability only to a certain extent affected their actual purchasing behavior. In the fashion industry trends in 2019 released by the global fashion agenda, only 7% of consumers said that sustainability was a key determinant of their purchase. The survey found that quality, value for money, and whether an item makes a person look like a winner are more important.

"I don't think the boohoo scandal will necessarily affect the whole industry," said aneesha Sherman, an analyst at Bernstein. "It doesn't negate the whole fast fashion industry."

To be sure, fashion companies without a strong online business will be severely hit by the blockade, but the sales growth of major e-commerce players is extremely rapid. After the recent scandal, some investors in boohoo have even increased their investment in the company. Jupiter asset management, its largest independent shareholder, increased its stake from 9.6 per cent to 10.1 per cent, a spokesman said the company saw an opportunity from a weak share price and was continuing to follow up supply chain investigations with boohoo.

Adam Cochrane, an analyst at Citibank, estimates that the company will successfully recover half of its share price decline in the short term as the market begins to realize that the scandal has not had a material impact on boohoo's sales.