Boohoo shares continued to plunge on Tuesday after weekend allegations linking it to illegal factories in Leicester had driven the share price down sharply on Monday.
The shares had closed at 385.5p each on Friday but were 297.3p on Monday afternoon and 256p at the time of writing on Tuesday morning.
It meant the firm’s overall market capitalization was ‘only’ £3.22 billion, well below the highs it had reached earlier this year.
The investor reaction came after a Sunday Times investigation that claimed an undeclared factory was paying workers only £3.50 an hour (well below the legal minimum wage). Added to that PR nightmare were suggestions that pressure on factories in the Leicester area to deliver orders on time had led to unsafe practices with inadequate social distancing contributing to the rise in coronavirus cases in the city.
While Boohoo has said it would urgently investigate the issue and was moving swiftly to ensure more robust oversight of its supply chain, concerns are still lingering.
But the concerns aren’t only about Boohoo as there are long-term worries over sub-contractors in the wider Leicester garment industry. Earlier official fast-fashion investigations have shown sub-standard working conditions and that factories flouting regulations can be closed down only to reopen under new names within days.