Boohoo’s boss has insisted that his new “model factory” will be a profitable manufacturing site rather than just a showroom as Debenhams, Dorothy Perkins and Wallis clothing is made back in the UK after being offshore nearly three decades ago moved.
Boohoo opened its first factory in Leicester in January, two years after the online retailer was swept by a scandal over the ill-treatment of workers in the city’s factories. The multimillion-pound former VW garage on Thurmaston Lane has been designed to best-in-class standards, including training programs for employees, who are paid above minimum wage and are entitled to the same vacations and benefits as other Boohoo staff .
John Lyttle, 55, chief executive, said during a tour of the site that more of Boohoo’s newly acquired brands would be made at the factory, as it focused on training workers to produce more complicated designs on recycled polyester, rather than from just the simple jersey dresses. Leicester’s textile mills usually shut down.
“This site is going to have its own profit and loss statement. It charges rent. It has to be a commercial operation,” Lyttle said. “I remember coming to Leicester as a young buyer for socks and knitwear, it was a huge textile industry, but when everything shifted abroad it was decimated. This site will show that Leicester has a great future.”
Boohoo says the big advantage of manufacturing in the UK is speed, with the ability to produce items in as little as two weeks from design and a week from repeat order. This is in stark contrast to the six-month lead times that major brands typically have with foreign suppliers.
Lyttle said: “We’ve bought some great UK store names over the past two years, but the fact is they weren’t making anything in the UK. We’re going to make them in the UK and 40 per cent of those clothes in the UK are going to be sold internationally, so we’re going to start exporting again.”
“I think we will see more companies shift to manufacturing in the UK and Europe. Everything we’ve seen in the last two years and even the past week with Chinese lockdowns has increased the importance of being closer to home. shipping has improved since the height of the crisis, but container prices are still very high.”
Boohoo was founded in 2006 by Carol Kane and Mahmud Kamani and launched in 2014 with a valuation of £560 million when it achieved a turnover of £110 million. Since acquiring brands including PrettyLittleThing, Debenhams, Coast, Oasis and Warehouse, it made a turnover of just £2bn last year.
Kane, told The Times, that she believed investors had left the company’s Leicester scandal and were reassured by the supply chain review and independent assessment by Sir Brian Leveson. “We were made an example and now we are setting an example for the British manufacturing industry. Someone had to.”
Lyttle said that although its new, strict audit processes meant it had cleared about 400 factories to about 70, it was still producing the same volume of goods from Leicester because it was now working with larger factories that could take on more work, rather than the unauthorized subcontracting that has taken place. “We have committed to British production while others have run for the hills,” he added.
The new factory, with approximately 100 employees, currently produces 6,000 items of clothing per week and will reach 20,000 with the introduction of a second shift. In addition to sewing and cutting, it also has two high-tech printing machines capable of producing 40,000 graphically printed T-shirts per week.
Boohoo’s share price has fallen three-quarters to 86¾p in the past year, down from 2½p or 2.7 percent tonight, valuing the company at £1.12 billion, well below its July 2020 level when £1 billion was taken from the company. company was wiped out after it emerged that some Leicester employees were paid just £3.50 an hour.
Kane said, “I think investors are kicking all the e-commerce businesses, everybody’s in it and we keep getting hit, if someone else misses, we get hit. There’s also short [sellers] now. But I know this is a better thing than it was two years ago.”