boohoo Group PLC (LON:BOO) was in fashion again on Thursday despite the ongoing scandal following allegations of poor working practices at a supplier in Leicester.
Shares in the retailer shot up 27% but were still 26% below last week’s level, descending to the fourth place in the list of largest companies in the junior market.
“Buyers start to return after the precipitous falls of earlier this week, with some saying that the declines have been too severe, when set against the underlying long-term fundamentals,” said Michael Hewson, analyst at CMC Markets.
Still, Goldman Sachs chopped the price target to 345p from 500p, though it retained the ‘buy’ recommendation.
The former ‘king of AIM’ came under fire after the Sunday Times revealed low pay and poor conditions at a supplier’s factory in Leicester.
The fast-fashion launched an investigation on Wednesday morning, hours after its brands were dropped by major retailers such as Next, ASOS and Zalando.
boohoo got some extra support on that afternoon after top shareholder Jupiter Asset Management upped its stake to 10.1% from 9.6%.
“This kind of supply chain issue is not new and one we have identified and discussed as a significant business risk for Boohoo and many other retailers in the fast-fashion industry,” another investor told the Financial Times.
Shares were trading 27% higher at 284.82p on Thursday before close.