Fast fashion brand Boohoo has ordered an independent review of its UK supply chain following reports of poor working conditions at a factory in Leicester.
It comes after retailers Next and Asos dropped Boohoo goods from their stores amid claims workers were underpaid and not socially distancing.
Boohoo, which said it was “shocked and appalled” by the allegations, has asked a senior barrister to lead the review.
Shares in the firm have dropped by a third this week.
It comes after a Sunday Times report claimed workers at a Leicester factory that supplied clothes to Boohoo were paid just £3.50 an hour, while being offered no protection from coronavirus.
The factory was also said to be operating during a localised lockdown designed to stop a spike in Covid-19 cases in Leicester.
Labour Behind the Label, a workers’ rights group, has separately claimed that some employees at factories in Leicester that supply the fast fashion firm were “forced to come into work while sick with Covid-19”.
On Tuesday, Boohoo said: “We take extremely seriously all allegations of malpractice, poor working conditions, and underpayment of workers.”
It said that Alison Levitt, a senior barrister who specialises in business crime, would lead an investigation looking into whether the company’s suppliers pay the minimum wage, and comply with coronavirus safety regulations, working hours rules and immigration law.
The company said it hoped to report the initial findings in September.
“We are deeply shocked by the recent allegations about the Leicester garment industry,” chief executive John Lyttle said on Wednesday after announcing the review.
Boohoo also said it would spend an initial £10m “to eradicate supply chain malpractice”, and was accelerating its independent third party supply chain review with ethical audit and compliance specialists, Verisio and Bureau Veritas.
Shares in the retailer fell a further 10% in early trading on Wednesday.
The company has grown rapidly since it was founded in Manchester in 2006 by Mahmud Kamani and Carol Kane.
Before the Sunday Times’ investigation the business was valued at about £5bn.