FTSE steadies as Boohoo surges on supply chain review

The FTSE 100 has steadied as a bruising week draws to a close, while on the AIM, shares in Boohoo (BOO) surged following the publication of a review into the online fashion business’ supply chain.

The UK blue-chip was trading broadly flat at 5,822, and was heading for a 2% weekly fall, driven by fears of tighter restrictions to contain the resurgent spread of Covid-19 in the UK.

‘It has been a generally torrid week for markets, with Covid-19 regaining centre stage as the ongoing lack of a vaccine and further tightening rules threaten to derail what was becoming a slow recovery,’ said Richard Hunter, head of markets at Interactive Investor.

International Consolidated Airlines (IAG) fell to the bottom of the index, down 5.2% at 90.3p, as the impact of the coronavirus pandemic on travel continued to weigh on the British Airways owner. Aircraft engine maker Rolls-Royce (RR) was close behind, down 2.4% at 146.6p.

UK mid-cap companies on the FTSE 250 inched 0.3% higher, with Cineworld (CINE) among the risers, up 4.5% at 43.2p as shares in the embattled cinema group clawed back some of yesterday’s heavy losses.

On the junior AIM market, shares in Boohoo surged 10.9% to 359.6p, as the online fashion business published the findings of an independent review into its supply chain, following damaging revelations by The Sunday Times about working conditions in a Leicester factory.

The review, headed by barrister Alison Levitt, found many failings in the Leicester supply chain and recommended improvements to Boohoo’s corporate governance.

Boohoo said it was confident it could implement the review’s recommendations without impacting the business’ financial performance.

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Boohoo chief executive John Lyttle said the review had ‘identified significant and clearly unacceptable issues in our supply chain, and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and compliance’.

Shore Capital analyst Greg Lawless said he would retain his ‘sell’ rating on the shares ‘given that the Leicester sourcing cloud remains over the company’.

‘Whilst this is a step in the right direction following the Sunday Times expose of working practices Boohoo is not out of the woods yet and we look for further clarity on wider investigations by other authorities in the UK before giving the company a clean bill of health.’



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