Boohoo cautioned with £100m lawsuit after modern slavery allegations

Global e-tailer, Boohoo, is potentially facing a £100 million lawsuit after "poor working conditions" and "low rates of pay" in its Leicester factories caused the company's value to plummet by £1.1 billion.

Shareholders, including Sovereign wealth funds and local councils, are scheming to take Boohoo to court after 2020 allegations of modern slavery saw the company’s value drop by over £1 billion, according to The Times.

Boohoo has suffered hefty share price falls in recent years. Share price has fallen by 85% over the past five years, leaving the company now worth £385 million.

Allegations of forced labour in Boohoo’s factories first came to light in 2020 when it was reported by The Sunday Times, causing losses for shareholders. Later, Barrister Alison Levitt KC independently confirmed the "allegations about poor working conditions and low rates of pay in many Leicester factories are not merely well-founded but substantially true".

A potential class action suit against Boohoo could reach the High Court if a settlement is not reached. However, according to the publication, no claim has yet been filed against Boohoo.

A spokesman for Boohoo commented: "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."

However, this isn't the only time Boohoo has made headlines in recent months. Just yesterday, Frasers Group upped its stake in Boohoo once again as it continues to build on its investment into the fashion retailer. The group now owns 209.3 million shares, according to the recent filings.

Earlier this months, the company warned earlier this month that full-year sales could tumble by up to 17% as under-pressure shoppers cut back. It blamed a slower-than-expected recovery in sales by volume and moves to focus on more profitable sales within its labels as part of overhaul plans.