"Boohoo Group demands supplier discount", 27 June 2023

Boohoo Group has demanded a 10% discount on current orders from some of its suppliers, for the second time in two months...

In an email sent to some suppliers...Boohoo said: "Based on significant decreases in freight, cotton and polyester prices year on year, we are rebasing our cost prices to reflect these improvements.

"[In] previous years we absorbed a significant cost inflation across our operations but, as a strategic partner to Boohoo Group, we need to ensure that the savings now being experienced across the industry are in your cost prices."

It is understood that the products involved are either in production, or have already been shipped. The move comes after Boohoo Group asked its suppliers for a 10% discount on delivered and undelivered orders in May.

During the same month, Boohoo requested discounts of more than 30% on outstanding orders from some of its Turkish suppliers, to match the prices the company has achieved in Pakistan.

One supplier said: "We already work on incredibly tight margins. If we deliver the goods [at discounted prices], we either make very small margin or possibly make a loss.

"But, if we cancel the orders, we would be left with loads of goods which we have paid for and can't sell to anybody else...

Another source said: "If they had told us beforehand [about the discounted prices], we would've said no to the orders because we can't afford that price. But they gave us orders, and asked for the discounts after we've made them. Right now the margin would be 1-2% at most."

Boohoo Group declined to comment. A source close to the situation said the business continues to be on the front foot on reducing its cost base. It is also understood to be trying to capture deflation in the supply chain to ensure the benefit can be passed on to customers.