Boohoo risks row with suppliers over payment terms switch

Boohoo is at risk of another backlash among its suppliers amid talk that it has shortened payment terms for only some of them.
The struggling fashion retailer, which includes the PrettyLittleThing and Karen Millen labels, upset its suppliers in 2022 when it extended its payment terms from 30 to 60 days as it faced a slowdown in sales.
It is understood that the online retailer recently reinstated 30-day payment terms in an attempt to get disgruntled suppliers back on side, but only to a small number on a highly secretive “strategic” list. The majority of its supplier base is thought to be expected to continue working to 60-day payment terms, which one Boohoo supplier warned “could spark a fallout. It would not go down well with those businesses if they found out that others were getting preferential treatment.”
A source close to Boohoo said the Manchester-based group “uses this fluid payment terms structure so that it can make use of its best suppliers by paying them quickly and negate the effect that has on cashflow by paying the bulk of its ‘non-strategic’ suppliers on longer terms”.
Suppliers often prefer shorter payment terms to improve their cashflow and to minimise currency fluctuations.
Boohoo, whose celebrity ambassadors include Jack Grealish, the Manchester City and England footballer, and Molly-Mae Hague, the Love Island and Instagram celebrity, extended its payment terms after the pandemic to try to manage its own cashflow pressures. The online retailer thrived during lockdowns, but its sales slumped when shoppers returned to stores and as it faced intense competition from rivals such as Shein.
In May Boohoo’s losses soared to almost £160 million as it encountered what it described as “difficult market conditions”. Shares in the company, today largely flat at 28¼p, have fallen by almost 90 per cent in the past five years. Mike Ashley’s Frasers Group is a shareholder.
It has been reported that Boohoo has been withholding payments from some suppliers over allegations that the quality of clothing was insufficient. Boohoo is said to be targeting manufacturers that it claims are responsible for a significant amount of defective products and is refusing to pay until the issues are addressed. The disagreement involves about ten clothing manufacturers out of an estimated 500 around the world, according to The Telegraph.
Boohoo was accused of squeezing suppliers in a BBC documentary last year. A Panorama investigation claimed that an undercover reporter working at the company’s Manchester headquarters had seen evidence of staff pressuring suppliers to lower prices, despite a pledge to overhaul its practices.
The Times revealed last year that the company had been demanding suppliers offer a 10 per cent discount on delivered and undelivered clothing orders.
A spokesman for Boohoo said: “Boohoo has not made changes to its supplier payment terms.”