Boohoo has seen its shares recover by 27 per cent this morning as investors see its “share price fall as a buying opportunity”.
The online fashion giant has endured a dismal week, seeing roughly £2 billion wiped off of its £5 billion market capitalisation, while big name brands including Zalando and Asos pulled its goods from their sites.
It comes after the The Sunday Times published a report alleging that workers in a Leicester factory making clothes for Boohoo were being paid as little as £3.50 an hour.
Boohoo has met the issue head on, and yesterday launched an independent investigation headed by top barrister and former head of law firm Mishcon de Reya’s white collar crime unit Alison Levitt QC.
Alongside the investigation Boohoo has pledged £10 million to eradicate malpractice in its supply chain.
While it is still facing a boycott on social media from customers and the cold shoulder from partner brands, its investors seem more persuaded by its actions.
Boohoo’s largest shareholder Jupiter Asset Management raised its stake from 9.6 per cent to 10.1 per cent on Monday “following conversations with management about its strategy”.
Meanwhile Jefferies said that despite the tough week for Boohoo : “We note that wholesale had contributed just 1.4 per cent of revenue last year, so we do not expect any material impact on forecasts.
“There was also positive news with a series of multi-agency government-backed visits to Leicester factories resulting in no enforcements and the identification of no offences under the Modern Slavery Act.”
Peel Hunt also went as far as to say this share price drop was a “buying opportunity” adding that it had seen “regular exposés into UK and overseas supply chain conditions, which rest on a high profile company such as boohoo or Primark.
“By accepting the need to rebuild Leicester’s reputation, Boohoo is stepping up to the plate, rather than brushing this aside.”