Boohoo claims the quality of the clothing it received from some suppliers was “not of a high enough standard”.
The fast-fashion retailer is reportedly refusing to pay specific manufacturers it accuses of being responsible for producing a high proportion of faulty goods, only paying them once issues have been resolved.
A source close to Boohoo told The Telegraph that this decision is part of a “three-month programme of work to improve quality following a marked increase in faulty goods being delivered by a small group of suppliers”.
They added this involved “very high levels of faulty goods” and that the retailer is “contractually entitled” to withhold the payments.
It is understood that 10 clothing manufacturers are involved in the current dispute out of an estimated 500 globally.
The majority of Boohoo’s suppliers are based in China, but the group works with at least 40 factories in the UK with most located in Leicester.
A Boohoo spokesperson said: “Boohoo Group is committed to delivering product of the highest quality to its customers.
“We are currently talking with a very small number of supplier partners where, unfortunately, the product supplied was not of a high enough standard.
“We are working collaboratively with them to remedy the situation and ensure this does not happen again.”
The group announced in May that losses for the year widened from £90m to £160m. It is due to face debt negotiations in the coming months to convince lenders to refinance more than £300m of existing loans.
Boohoo and its creditors have hired specialist debt advisers to oversee the discussions.
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