“The online fashion retailer Boohoo has been quick to react to media reports that it’s facing the possibility of a US import ban because of allegations over the use of forced labour.
Danni Hewson, financial analyst at AJ Bell, said: “The group has said it has ‘not received any correspondence from, nor is it aware of any investigation by, US Customs and Border Protection’. It goes on to talk about the measures it is taking to ensure all its products meet the required standards.
“But these new allegations will hurt the reputation of the business still trying to regain its sparkle after an investigation into its UK suppliers left it with a long to do list.
“And it comes at a particularly crucial time. Our lockdown shopping habits helped sales rocket by 40% last year but the company will be concerned that growth might not be sustainable, particularly when you consider how the spending power of 16-25 year olds has been affected by the pandemic. So, it’s looking to broaden its customer base with the £55m acquisition of Debenhams and several of the Arcadia brands.
“It’s also looking to grow its overseas order books and the US is undoubtedly a vital part of Boohoos plans.
“Shares took a tumble this morning, falling more than 7% in early trade. Investors will be keeping a close eye on how quickly boohoo can put this issue to bed once and for all.
“Today’s consumer isn’t just looking for a bargain. They are looking to buy into a lifestyle and social responsibility is part of that.”