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Boohoo Chairman: ‘We Have Made Some Mistakes’

Boohoo, which came under scrutiny over the summer for working with U.K. suppliers that reportedly flouted labor laws, says it’s a victim of its own runaway success.

“We have made some mistakes but over the past 14 years we’ve done more right than wrong,” Mahmud Kamani, chairman of the Manchester-based ultra-fast-fashion e-tailer, told a U.K. parliamentary hearing Wednesday. “Our business has been growing between 50 [percent] and 100 [percent] a year at the top line level and processes do fall away; what we are guilty of is not putting processes in fast enough.”

Kamani, whose company also operates brands such as PrettyLittleThing, Nasty Gal, Oasis, Karen Millen and Warehouse, said it sometimes seemed like the company was being “punished” for sourcing its products domestically in Leicester even though it would be “very easy for us to take all our production offshore.”

While Kamani appeared to shrug off any personal responsibility for labor issues in Leicester, which supplies between 70 percent and 80 percent of its output to Boohoo, he also insisted—repeatedly—that Boohoo was “committed to making good,” and that the company has “got more right than wrong” in its 14 years of existence.

Similarly, Kamani said that while he was “shocked and appalled” by allegations of labor abuses, any noncompliance occurred at factories that Boohoo didn’t own or control. “I cannot possibly know everything in this business, but I do know this is a priority in our business,” he said.

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Kamani also defended a “99 percent off” Black Friday sale that sold items for pennies, describing it as shrewd PR. “The fact that we’re talking about it today means that that marketing worked,” he said.

Andrew Reaney, who joined Boohoo in September as its responsible sourcing and product operations director, told ministers that the company has since severed ties with 64 of its Leicester suppliers because of what it saw as a “consistent lack of transparency,” though he declined to delve into whether the terminations were a result of wage violations.

He also noted that Verisio, one of two compliance auditors employed by Boohoo, conducted more than 400 unannounced audits over the past year and that it was “actively encouraging whistleblowing” by workers who felt exploited or unsafe.

Boohoo indicated that it will publish a list of its Tier 1 domestic suppliers by next March, and its Tier 1 overseas suppliers by next September, leading Member of Parliament Philip Dunne to question in a statement on Thursday why it couldn’t be done immediately, “not least given Boohoo Group’s recent termination of 64 of its suppliers in Leicester?”

The hearing by the House of Commons Environmental Audit Committee came three months after a Boohoo-commissioned independent investigation uncovered “widespread if not endemic” abuses across the e-tailer’s Leicester supply chain, where workers faced numerous life-threatening health and safety violations and were paid below the minimum wage.

Alison Levitt, the former Crown Prosecution Service legal advisor who headed the review, concluded that the lack of evidence that Boohoo committed criminal offenses aside, reports about low wages and unsafe conditions were “substantially true.” She also characterized the company’s own monitoring of the “many failings in the Leicester supply chain” as “inadequate” due to “weak corporate governance.”

But while the scandal prompted auditor PriceWaterhouseCoopers to hand in its notice—not to mention nearly halved Boohoo’s stock price from a June 17 high—it has barely dinged the company’s bottom line. In its September earnings report, Boohoo said it expects group revenue for the year through Feb. 28, 2021, to grow between 28 percent to 32 percent—up from the 25 percent previously guided.