Shares in fashion retailer Quiz have plunged by more than a fifth after it said it had suspended a supplier over allegations a sub-contractor failed to meet National Living Wage rules.
The company revealed it had launched an investigation but already understood, from an initial review, that a sub-contractor had been used by the supplier in question in “direct contravention of a previous instruction from Quiz.”
It said the supplier was based in the “Leicester region”.
The announcement builds on pressure within the fashion sector this month as rival Boohoo also grapples claims relating to working conditions in its supply chain in the area.
The allegations have resulted in a collapse in Boohoo’s share price as other retailers pulled Boohoo stock from their own stores, pending the results of an independent investigation announced last week.
In the case of Quiz, The Times reported on Saturday that workers at a factory had been offered £3 an hour to make clothes for the company.
People over the age of 25 are entitled to at least £8.72 under the wage rules.
Shares – already more than 60% down in the year to date – were 21% down when the market opened on Monday.
Quiz said in its statement: “The board is aware that Quiz has clear-cut social responsibilities and legal obligations and understands the critical importance of ensuring the group’s products are sourced from manufacturers whose business operations conform to appropriate standards.
“All suppliers to Quiz must comply with the group’s Ethical Code of Practice. Relationships with any suppliers who fail to comply with this code or meet the group’s standards will be terminated.
“Quiz 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.
“In addition to taking immediate action on this incident, the board commits to a full review of the group’s current auditing processes to ensure they are robust enough to ensure on-going compliance with our Ethical Code of Practice throughout the group’s supply chain.”
Chief executive, Tarak Ramzan, added: “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. We will update our stakeholders in due course.”