Boohoo facing potential investor lawsuit - report

26th Oct 2023 08:08

(Sharecast News) - Boohoo Group is facing potential legal action from investors after allegations of illegal working conditions hit the fast fashion retailer's share price, it was reported on Thursday.

Details of unacceptable working conditions and underpayment at factories supplying Boohoo first emerged in 2020, following a Sunday Times investigation.

In response, the AIM-listed company appointed barrister Alison Levitt to conduct an independent review. It found that the claims were "not merely well-founded but substantially true", and that Boohoo knew of "endemic" problems at the factories.

Boohoo accepted the findings in full and apologised for failures in corporate governance.

But the retailer's share price was hit hard, with more than £1bn wiped off its value, and on Thursday The Telegraph said shareholders were now seeking compensation.

It noted that no claim had yet been filed, but said up to a 100 investors could be involved in a £100m class action, including sovereign wealth funds and local councils. The newspaper also noted that Boohoo had instructed Herbert Smith Freehills, the City law firm.

A Boohoo spokesperson told The Telegraph: "A formal claim relating to this matter has not been made. If any proceedings are issued in relation to this matter, they will be robustly defended."