Shares in online clothing retailer Boohoo recently took a dive when it was confirmed that their auditing company, the accounting behemoth PWC, had terminated their contract with the company following their recent supply chain scandal.
£800m Drop
The Kamani family, who own Boohoo, saw their company’s shares plummet by as much as 14 percent, resulting in a loss of 43.30p from the starting value of 272.30 on October 19th.
This drop resulted in an £800 million decrease in Boohoo’s stock market value, and wasn’t helped by the fact that four other accountancy firms have declined to work with the company.
This significant drop in the value of the company followed allegations that some of Boohoo’s suppliers were mistreating their workforce, specifically in the Leicester area where the company is located.
High Risk
With the company under increasing pressure and scrutiny, PWC terminated their contract with Boohoo, citing the continuing risk of working with the online fashion retailer. However, a Boohoo spokesperson denied this claim and stated that they are currently seeking a new auditing services provider.
The damage to Boohoo’s reputation continues, with the UK’s National Crime Agency investigating the textile manufacturing industry in Leicester after allegations of exploitation came to light.
Whistleblower Within the Company
These allegations came about after a whistleblower revealed that some of the companies supplying Boohoo had been underpaying their staff consistently. Workers were being paid as little as £3.50 per hour to pack clothing items that would later be sold on Boohoo’s website. To put this into perspective, the current national minimum wage in the UK for those aged 18-20 is £6.45 per hour, rising to £8.72 per hour for those over 25.
With stock in the company continuing to be unloved, some of Boohoo’s executives had to invest their own money to prevent the share price from dropping further.