Boohoo chief confirms plans for "model factory" in Leicester
Boohoo CEO John Lyttle has confirmed the fast fashion group's plans to build a "model", hi-tech garment factory in Leicester.
Speaking to the Mail on Sunday this weekend, Lyttle said the move to own create its own UK manufacturing site was part of the Manchester group's plans to create a global fashion empire in the mould of Spain's Inditex, parent of Zara, Massimo Dutti and Bershka.
"Inditex have a number of joint ventures in Spain and in Portugal that they work with and that really help their flexibility – it's not dissimilar to that.
"Let's get this one up and running, prove the model. And then decide and see where we go from there. We're not manufacturers but we feel confident we can execute this and we can make this factory successful," he said.
His interview confirms prior reports that Boohoo had acquired a 2.5 acre site in the north east of Leicester, which had previously been home to a car dealership, and had plans to convert in into a factory.
The acquisition of the site pre-dated the recent furore surrounding allegations by an undercover reporter for The Sunday Times, which said that staff at a factory supplying Boohoo and its subsidiary Nasty Gal were paid as little as £3.50 an hour.
Boohoo said the factory in question had been subcontracted without its knowledge to repackage garments that had been made elsewhere, and it has since severed ties with the company that subcontracted it. It added that its own investigations found no evidence of the underpayment but that its code of conduct had been breached.
However the revelations hammered its share price which is currently sitting at at around 255p, having been as high as 415p before the allegations were made three weeks ago.
Lyttle has said that the new site should be up and running with a joint venture partner by September but if there are any delays then it will lease a temporary site to get the project underway. He said the move signalled the firm's commitment to UK manufacturing with the new factory employing around 200 staff and making 50,000 garments a week.
The cornerstone of Boohoo's success is its ability to get product onto its site as quickly as possible, which it is able to do because it makes around 40% of its clothing in the UK. It refers to this as its "test and repeat" model meaning styles that prove to be best sellers can be repeated quickly.
The process also enabled it to pivot away from partywear towards leisurewear during lockdown, leading to an increase in sales when many fashion businesses saw sales slump.
But with Boohoo now turning over well in excess of £1bn many felt it had outgrown the capacity in Leicester and that suppliers had cut corners in order to deliver on its orders. Lyttle, however, has said he wants to prove that mass fashion can be made in the UK in a way that respects workers rights and health & safety.
Lyttle, who joined from Primark in Spring last year, added his voice to those of many retailers and MPs who wrote to Home Secretary Priti Patel to suggest that factories in the UK be required to have a "Fit to Trade" license.
Boohoo has also hired Alison Levitt QC to carry out an independent investigation into its entire supply chain.