Home Business No Honey, The Punters Don't Give A Monkey's About Boohoo's Supply Chain

No Honey, The Punters Don’t Give A Monkey’s About Boohoo’s Supply Chain

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A useful little guide to, test of, the disconnect between the people of Britain and those who claim to speak for them. Or, if you prefer, that chasm between the red wall and the metropolitan elite.

It is a currently fashionable claim that companies must pay great attention to environmental, sustainability and governance issues, ESG. This includes things like ensuring that suppliers 5 levels down the supply chain pay the minimum wage etc. There are two forms of this insistence upon ESG. One is simply that the metropolitan elite – those who run the investment funds are just as much part of it as those who write for broadsheet papers, they share the culture and are probably bedding each other – think that people should be worried about ESG. You know, because.

The other more rational claim is that punters of businesses care about ESG so a company has to care in order to appease the punters. This may or may not be true but it is rational to believe so – at least until it has been tested out there in the real world. Which brings us to Boohoo and those minimum wage claims 5 levels down the supply chain in Leicester. The Observer tells us that:

Boohoo is ready to party but investors may not be as keen
Now the owner of many high street names, the group will have to work hard to live down last year’s factory conditions scandal

Well, that’s a contention, perhaps we can see whether it’s true?

With social lives on hold for more than 12 months, there has been little call for the party dresses sold under its Boohoo and PrettyLittleThing (PLT) labels, sometimes for as little as a fiver. But that has not stopped sales at the Manchester-based group powering ahead as it quickly switched to selling joggers and hoodies emblazoned with slogans such as “staycation”, for lounging around at home.

Sales power ahead, eh? Seems that da youf don’t give a monkey’s about ESG then.

But while shoppers remain enthusiastic buyers of Boohoo’s inexpensive clothing, investors are more circumspect about its shares after revelations last summer linked it to factories with poor working conditions here and overseas.

The share price, which touched 415p in June 2020, almost halved in the wake of the scandal, with Aberdeen Standard Investments, one of its biggest shareholders, dumping most of its stake and bemoaning Boohoo’s inadequate response.

Abrdn holds the correct metropolitan views despite being based in the far frozen north where civilisation is just a distant memory. How nice for them. Except, well, not so nice for their investors.

Because one of the better investments over this past year has been to run with hte punters for Boohoo’s vlothes, not metropolitan concerns about ESG. As I’ve actually detailed elsewhere. Buy Boohoo when Aberdeen is dumping over ESG, sell when the stock recovers, buy again the next time there’s a very serious and concerning report about ESG.

The contention that Boohoo’s punters don’t give a toss about ESG makes money. Running with the fashionable concerns about ESG loses it. We have tested and found false the contention that ESG is something that companies must adhere to in order to retain their punters and their business.

Which means that ESG concern is left as just being another fashionable and out of touch fad, doesn’t it?

Oh.

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