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How Boohoo Made A Comeback After A Summer Of Jaw-Dropping Headlines

How Boohoo Made A Comeback After A Summer Of Jaw-Dropping Headlines

Romana Hai
Scandal? What Scandal? How Boohoo Made A Comeback After A Summer Of Jaw-Dropping Headlines

Since the onset of the pandemic, consumers have been spending more time at home and engaging in more online shopping than usual. That is a trend that was helping ultra-fast-fashion group Boohoo enjoy a significant increase in sales. That period of heightened growth, however, came to an abrupt stop in late June when news regarding poor working conditions and worker exploitation started to surface. As Retail Bum reported, these reports were then also linked to an outbreak of COVID-19.

Soon after, retailers like Next Plc, amongst several others, temporarily stopped selling products by Boohoo and its sister label PrettyLittleThing on their website. But despite these roadblocks, the company has managed to make a strong recovery. In fact, according to the company’s recent earnings report, Boohoo saw its profits rise by $66.9 million, a stunning 51 percent growth in the first half of this year. Overall, the company generated nearly $535 million in revenue in the quarter ending August 31, an increase of 44 percent since last year.

How Boohoo managed to make a u-turn on its recovery is quite a bit puzzling. The company predominately targets Gen Z consumers, a group that favors brands that vocalize company values and are mission-oriented.

So, what happened here? Did the company’s ability to deliver the latest trends for pennies trump company values and missions?

Boohoo’s shockingly strong performance perhaps indicates a trend that is much bigger. Fast fashion brands such as H&M and Zara have both weathered the pandemic and have recovered their sales faster than expected. ASOS, meanwhile, has also remained bullish on its growth.

But while H&M, Zara and ASOS have also done well, these brands fall under the fast-fashion category. Boohoo is a tad bit different. More specifically, its ultra-fast-fashion business offers prices that are even cheaper than those offered by H&M, Zara and ASOS.

It is worth noting that while Boohoo might sell ultra-cheap clothing, it’s Boohoo’s efforts towards building an empire around that business model is what’s setting Boohoo apart from other brands. Included int he Boohoo empire are labels like Karen Millen, Oasis and Warehouse, which has helped it reach a broader customer base.

While each of these brands cater to a wide range of customers, it’s the commonality that all Boohoo customers share that make Boohoo a true success; they all on the digital-savvy side of things. That said, it’s imperative for the brand to keep up with all the latest Instagram fashion trends and producing those trends as fast and as cheap as possible.

How Boohoo made a comeback

Production speed has been a critical component of success for Boohoo, which in turn has meant working with suppliers that play fast and loose with local regulations and offer poor working conditions to workers.

But when the company started to make headlines this summer, Boohoo acted quickly to save its brand from spiraling downward, ending its relationships with two suppliers and launching an independent investigation.

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Last week, the company also published the findings from its investigation. The report verified allegations of poor working conditions throughout the supply chain that went on for some time, but it also revealed that Boohoo did not intentionally allow or create such conditions, nor did they profit from those conditions or break any laws.

“Boohoo’s culpability lies not in doing nothing but that they did too little too late,” said the report. The report follows a lengthy list of immediate actions that include items like reducing its approved supplier list within the next six months and “publishing a refreshed list of Tier 1 suppliers and Tier 2 subcontractors as soon as possible.” The report also points to the need for immediate spot checks across the entire UK supply chain and new systems to manage and ensure supply chain compliance.

Other action items include appointing two new non-executive directors to its board, strengthening its sourcing team and creating new purchasing guidelines for its buyers.

“We are aware that we will not achieve our ambition to be the fashion e-commerce leader, not be a strong investment proposition and not succeed if we do not get this right in terms of compliance and sustainability,” said Chief Executive John Lyttle on an investor call held on Wednesday. “We intend to build all shareholders’ confidence that these matters will be dealt with appropriately and sensitively and that they will not recur.”

How well Boohoo adapts to the recommendations in its report remains to be seen, but one thing is clear: Catering to a wider customer base can sometimes make all the difference between seeing the business run aground or helping it soar to new heights.

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