Shares in online fast fashion retailer Boohoo (BOO:AIM) fell 1.6% to 304.4p as the firm appointed a new auditor but disappointed some investors by not hiring one of the ‘big four’.
Following a tender process led by its audit committee, Boohoo said its board of directors has approved the proposed appointment of PKF Littlejohn as its new auditor with immediate effect.
It comes after Boohoo launched a tender process for a new auditor on 19 October after PwC - one of the ‘big four’ auditors alongside Deloitte, EY and KPMG - resigned from the role, reportedly highlighting reputational risks of continuing to work for Boohoo.
Boohoo has been in the spotlight over a number of ESG concerns in recent months, having been accused of allowing abuses of employment law in its supply chain.
Executive pay has also been an issue for the company, with a third of shareholders opposing the remuneration report at the company’s last AGM.
ANALYST VIEW
Jefferies analyst Andrew Wade said that while the appointment is not one of the big four that some investors may have expected, he pointed out that PKF Littlejohn is, in terms of scale, in the top ten UK auditors.
He also noted that PwC confirmed there are no matters in connection with the change that should be brought to the attention of shareholders.
Wade said, ‘We recognise that there may be some disappointment from investors that Boohoo’s new auditor is not one of the Big 4.
‘However, PwC has just left the role, and a number of other larger players (e.g. KPMG) are engaged to provide non-audit services. Meanwhile, PKF Littlejohn is the seventh-largest UK accountancy practice by number of stock market clients (adviser-rankings.com) and eighth largest by total market cap of stock market clients.’
