In 2015, university professor Nik Hammer studied working conditions in the local garment industry of Leicester, England, finding it rife with verbal abuse, harassment, and safety violations.

He cataloged what he called severe and widespread labor-law infringements in a 57-page report, detailing how most workers were paid about 3 pounds ($3.80) an hour in cash and had no formal employment contracts.

Five years later, the stock meltdown of online clothing retailer Boohoo Group Plc focused new attention on labor abuses in one of the last bastions of the textile industry in high-wage Europe. Newspapers alleged some suppliers underpaid workers and forced them to toil in closed factories and without hand sanitizer as Leicester reentered a local lockdown amid a surge in COVID-19 infections. At one point this week, Boohoo shares had lost more than half of their value.

While the maker of Nasty Gal and PrettyLittleThing clothing has recovered some of that loss, it could take a lot longer to put to rest concerns about whether its fast-fashion model churning out made-in-England miniskirts and playsuits for less than $10 is sustainable.

“Conditions in Leicester remind me of tiny workshops I used to see in South Asia 10 to 15 years ago,” said Henrietta Lake of Lake Advisory, which consults companies on creating ethical and sustainable global supply chains. “We’re talking Dickensian.”

Leicester has been a hub for manufacturing in Britain since the sixteenth century, built on a reputation for hosiery, shirts, socks and gloves. However, the emergence of low-cost manufacturing in Asia and entry of China into the World Trade Organization nearly decimated the industry in a city whose motto once was “Leicester clothes the world.”

Fast-fashion and online-only retailers like Boohoo filled the gap, fueling a revival in Leicester’s manufacturing during the past decade. Such companies took a business model perfected by Zara owner Inditex SA and put it on steroids. Cranking out hundreds of new designs each week, Boohoo needs close-to-home sourcing to meet millennials’ whims. That has protected one of Europe’s few remaining textile hubs from disappearing, while even Italy and Spain struggle to keep their garment industries intact.

Eager to work with local clients and stay in business, the Leicester factories helped create what Hammer said is an entirely new and different industry. Instead of large, unionized firms churning out thousands of clothing lines, Leicester now is full of hundreds of tiny workshops and subcontractors, sometimes employing fewer than 10 people, servicing much smaller orders for market traders and wholesalers.

For many years, Boohoo’s growth was stratospheric. In the first 10 minutes after the company’s shares began trading in a 2014 initial public offering, investors pushed them up 70%. Last week the company’s market value had exceeded 5 billion pounds, towering above Marks & Spencer Group Plc.

Many attribute Boohoo’s success to its ability to harness a network of at least 150 factories in Leicester to quickly produce items inspired from catwalks or social media within a few weeks. Nearly 40% of its clothing is sourced from the UK, mostly in Leicester, using what Boohoo calls a “test and repeat” model where it trials designs on its website and then ramps up the orders of items that prove popular. Boohoo says it’s helping support UK manufacturing.

The local garment industry’s Wild West reputation has led many bigger retailers to abandon it in search of cheaper countries, which also face challenges in protecting employee rights and working conditions. The collapse of an eight-story garment factory in Bangladesh that killed more than a thousand people in 2013 sparked worldwide criticism. That spurred Inditex and H&M owner Hennes & Mauritz AB to sign a five-year accord to improve cramped and often unsafe working conditions in Bangladesh’s factories.

Buying from manufacturing hubs around the world means placing orders months in advance and having less flexibility. Still, many rivals have chosen that route. New Look Ltd. works with 12 factories in Leicester, down from 109 a decade ago. Asos Plc deals with seven factories there, accounting for 2% of its clothing. Associated British Foods Plc’s Primark hasn’t sourced clothes from the city in years. Next Plc, one of the largest clothing chains in Britain, doesn’t source any garments from Leicester even though its head office is there.

Many retailers have significantly reduced their UK sourcing because of “systemic non-compliance to legal standards” in Britain’s textile industry, said David Camp, chief executive officer of the Association of Labour Providers Ltd.

Missguided, a smaller rival to Boohoo that plans to continue sourcing from Leicester, has reduced the number of factories it buys from to 12 from 80, in an attempt to monitor working conditions more closely.

“You simply can’t get your arms around 80 suppliers,” said Paul Smith, Missguided’s head of sourcing. “You can’t visit them regularly and the level of business you give each one is relatively insignificant. So we took a decision to be more important to fewer factories and give them consistent levels of business.”

Boohoo says it has found no evidence of workers receiving less than the minimum wage but has pledged to carry out an independent review led by Alison Levitt, a lawyer and former UK public prosecutor. It has also promised to work with any official investigations that may result from reports this week. Home Secretary Priti Patel said the allegations were “appalling” and called for investigations, which are being carried out by seven UK authorities.

Industry experts say it is possible for Leicester garment firms to operate legally and still be an attractive manufacturing base, even if the cost of producing garments increases. One advantage fast-fashion retailers have is that by sourcing locally, they can respond to quick changes in demand, and thereby usually avoid the need to sell unsold inventory in big clearance sales. Thus, they have some room to absorb higher costs.

Though Boohoo has denied the allegations of labor exploitation, the pressure to overhaul Leicester’s operations as #boycottboohoo trends on social media could become too great to make cheap dresses there. On Friday, Standard Life Aberdeen Plc, one of the biggest shareholders in Boohoo, sold most of its shares, criticizing the retailer’s response so far “as inadequate in scope, timeliness and gravity.” — Bloomberg