The co-founders of Boohoo have bought another £15m of shares in the troubled online fashion business, helping to drive the share price 12% higher on Thursday.
Mahmud Kamani pumped £10.7m into 5m shares in the company while Carol Kane spent £4.3m on the stock on Thursday in an effort to rebuild confidence in Boohoo, which has been hit by allegations of malpractice in its supply chain.
Iain McDonald, a non-executive director, meanwhile bought contracts for difference on about £107,000 of Boohoo shares. The complex form of derivative is effectively a bet on the share price.
Their joint effort sent Boohoo’s share price up 12% on Thursday to 235p, recovering some of the near 50% dive since reports of problems in a Leicester factory that supplies the group emerged last week. The company has launched an independent investigation into the matter.
Boohoo’s share price has taken a knock after a barrage of criticism of its dealings with garment factories prompted some ethical investors to pull out.
The Guardian understands that an ethical fund run by DWS Invest, part of Deutsche Bank, followed the lead of Aberdeen Standard Investments in selling down its stake in Boohoo. Until recently, the fund held about 800,000 shares worth about £2m. The ethical fund makes up only a portion of Deutsche’s overall holding of about 1.3% in Boohoo.
DWS would not confirm or deny the share sale but said: “We regularly assess [ethical] compliance as an integral part of our investment process, and given the recent developments around labour standards we have already re-evaluated our investment into Boohoo independent of the ratings by external data providers. We encourage the whole asset management industry to actively engage with companies and push for more transparency.”
On Thursday the chair of an influential committee of MPs called for further action from Boohoo, saying the online fashion firm had failed to address warnings of malpractice at Leicester factories from at least a year ago.
Boohoo said on 8 July that it was “shocked and appalled” by allegations that one of its suppliers was employing workers on less than the minimum wage and said it had launched an independent review of its supply chain.
But Philip Dunne, the chairman of the environmental audit committee, which questioned Carol Kane about problems in Leicester factories in November 2018 for a report on the fast fashion industry, said: i“It is incredible that over a year since the committee highlighted illegal working practices in its supply chain, Boohoo has publicly denied any knowledge of what has been happening for years”.