Fast fashion giant Boohoo is embroiled in a stand-off with suppliers after withholding payments, citing concerns over poor clothing quality.

The online budget retailer is reportedly targeting manufacturers it claims are responsible for producing a high proportion of faulty goods, refusing to pay until the issues are resolved.

A source close to Boohoo cited by The Telegraph described the action as 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". The source claimed the company was "contractually entitled" to withhold money due to "very high levels of faulty goods".

This dispute adds to a growing list of challenges facing Boohoo's executive chairman Mahmud Kamani. The company has been grappling with poor trading, fierce competition from Chinese rivals, and a share price that has plummeted more than 90 per cent from its pandemic peaks.

In May, Boohoo announced that annual losses had widened to £160 million from £90 million the previous year, with turnover plunging 17 per cent to £1.5 billion. The Manchester-based company also faces crucial debt negotiations in the coming months as it attempts to refinance more than £300 million of existing loans.

Boohoo has a £325 million unsecured overdraft, which must be repaid in two instalments over the next 18 months. Of that, £75 million is due next year after banks refused Boohoo's request for an extension, with the remaining £250 million due in 2026.

A spokesman for Boohoo stated: "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 dispute is understood to involve around 10 clothing manufacturers out of an estimated 500 worldwide. This latest controversy follows accusations of supplier squeezing in a BBC documentary last year, where an undercover reporter claimed to have witnessed staff pressuring suppliers to lower prices despite pledges to overhaul practices.

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