Shares in Quiz (QUIZ:AIM) crumbled 8.3% to 6.2p on Monday after the hard-pressed fashion brand said it was investigating claims that workers at a supplier factory in Leicester were being paid below UK minimum wages.

Similar to the damaging allegations made against bigger fast-fashion rival Boohoo (BOO:AIM), where a supplier based in Leicester had subcontracted out to a further factory to supply product, the Quiz story marks another dark day for the reputation of the UK’s cut-price clothing industry.

SERIOUS QUESTIONS TO ANSWER

In today’s update, struggling womenswear retailer Quiz said it is ‘extremely concerned’ by media reports regarding an alleged instance of non-compliance with National Living Wage requirements.

Quiz insisted it is ‘very grateful to the press for highlighting these alleged breaches’, and from an initial review it believes one of its Leicester-bases suppliers has ‘used a sub-contractor in direct contravention of a previous instruction from Quiz. It is this sub-contractor that is subject of the National Living Wage complaint.’

Glasgow-headquartered Quiz insisted it has immediately suspended activity with the supplier pending further investigation, saying it monitors its supplier base through audits and site visits and is in the advanced stages of appointing an independent third-party partner to provide more regular audits of suppliers in the Leicester region.

RAMZAN RESPONDS

Chief executive Tarak Ramzan commented: ‘We are extremely concerned and disappointed to be informed of the alleged breach of National Living Wage requirements in a factory making Quiz products. The alleged breaches to both the law and Quiz’s Ethical Code of Practice are totally unacceptable.

‘We are thoroughly investigating this incident and will also conduct a fuller review of our supplier auditing processes to ensure that they are robust.’

Last month, embattled Quiz placed its brick and mortar stores subsidiary into administration, the COVID-19 pandemic having accelerated the structural spending shift online, and bought the business back so it can try to renegotiate better rental terms on a much-reduced store base.

THE SHORE CAPITAL VIEW

‘So, another similar example of a fast-fashion retailer with alleged illegal working practices,’ thundered Shore Capital this morning, while reiterating its recent ‘sell’ rating on beleaguered Boohoo.

The broker noted on Friday ‘that Aberdeen Standard Life sold down 27 million shares (almost their entire stake in Boohoo) describing Boohoo’s subsequent actions as “inadequate”. Having seen a significant shareholder being so vocal with their concerns surrounding working practices, we believe that there will be growing difficulty for ESG investors in this arena.’

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Issue Date: 13 Jul 2020