Boohoo has plans for a hi-tech Leicester factory

Boohoo has acquired a site in Leicester with a view to turning it into a highly automated garment making facility, it has been reported.

Prior to the controversy over allegations of mistreatment of staff at a factory in the city which had been subcontracted by one of its suppliers, the fast fashion group had bought a disused Vauxhall dealership in the city’s northeastern corner with a view to converting it, The Sunday Times reported.

The same newspaper sent an undercover reporter to Leicester to investigate conditions at garment making facilities in the city which was to prove particularly devastating for Boohoo, which manufactures around 40% of its clothes in Leicester.

It was alleged that staff at a business, later identified at Morefray Ltd, were paid as little as £3.50 an hour and clothes destined for Boohoo and Nasty Gal were seen at the premises. Boohoo carried out an investigation into the matter and claimed Morefray had been subcontracted by Revolution Clothing to carry out the repacking of garments, without its knowledge, and that it had terminated its relationship with the supplier.

It also appointed Alison Levitt QC to carry out an independent inquiry into its entire supply chain. But its share price was hammered by the allegations, losing almost half of its value. On Friday shares closed at 229.5p having traded at up to 415p before The Sunday Times' initial report.

This weekend the newspaper reported that Mahmud Kamani, founder of the business, had been upset by the allegations and is determined to rebuild its value. The company has yet to receive planning permission for the site, which has been described as "a manufacturing 'village' that would set the standard for the city’s textiles industry".

Analysts have maintained that in order for Boohoo to retain its margins, it would need to move much of its production to cheaper, overseas markets, such as Bangladesh, since keeping production in Leicester would prove too expensive.

However there does seem to be some determination from Boohoo to continue to support UK manufacturing, which has enabled its speed to market and was the key to its success during the lockdown period when it was able to pivot its offer very quickly from partywear to leisurewear.

The company's CEO John Lyttle has written to Home Secretary Priti Patel to urge her to introduce "Fit to Trade" licenses for UK garment manufacturers to ensure they pay all relevant taxes and appropriate wages, and implement appropriate health & safety standards.

In his letter, which was revealed on Saturday, Lyttle said: “We firmly believe that ‘Made in Britain’ should be a label of pride for those wearing our clothes and badge of honour for those who make them."