Clothing & Shoes

Boohoo faces $100m US lawsuit over fake promotion claims

Boohoo is reportedly facing a $100m (£81m) civil lawsuit from a US law firm over claims it misled shoppers over running sales promotions based on “fake” prices.

According to The Telegraph, the lawsuit is being brought forward from Californian firms Almadani Law and AI Law which have accused the retailer of running “sham sales” by offering  heavy discounts on “fake” prices which were never or almost never the prices it had been charging customers. 

The firms also claim that damages could exceed $100m if successful. 

A spokesperson for Boohoo said: “Boohoo is aware of the claims being made in California and will not be commenting on the details as this is an ongoing case. At boohoo, customer satisfaction is our utmost priority. We are focused on bringing our customers designs that they love at affordable prices, and running promotions, is just one of the ways that we invest in our customer proposition.”

The news comes just a week after the clothing retailer announced its acquisition of the remaining 34% of shares in Pretty Little Thing (PLT) from minority shareholders, in a deal that could potentially rise to £323.8m. 

And also closely follows a recent share slide after a short-selling note, issued on 26 May, which alleged that the retailer overstated its cash flow and disclosed information that “could be deemed to be misleading”.

The online fashion retailer said that it “strongly refutes” any allegations of understating costs incurred by PLT, which would “thereby overstate its profitability”. 

In its latest update, Boohoo said that the acquisition, which will see full ownership of the PLT brand, marks a step towards “achieving its vision to lead the fashion e-commerce market globally”, adding that PLT is in high growth with “enormous growth potential” ahead of it.

The retailer also spoke of its belief that it can “continue to successfully disrupt the international markets it operates in”, whilst retaining a strong balance sheet following the acquisition. 

In addition, it outlined its plans to take advantage of “numerous” M&A opportunities that it believes are “likely” to emerge in the global fashion industry over the coming months.

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