Accounts show Edun Apparel, founded by the rock star and his wife Ali Hewson in 2005, suffered losses to the tune of €6.8million in 2011.
The company is also 49 per cent owned by the world’s largest luxury goods group LVMH which put €6.7million into Edun in 2009.
The Paris-headquartered group also owns some of the world’s top brands — including Louis Vuitton, Donna Karan, Moet Chandon and Veuve Clicquot champagne.
But U2 singer Bono has now raised eyebrows after he and his wife’s ethical fashion house moved production to an undisclosed location in China.
About 15 per cent of Edun’s clothes will be made in the Communist country after African orders proved to be of poor quality.
Factory owners in China are notorious for paying workers low wages and forcing them to work long hours in sweatshop conditions.
Bono and Mrs Hewson launched Edun in 2005 to ‘put our money where our mouths were’ to improve the lives of those in developing nations and make clothing manufacturing more sustainable.
Alongside Sir Bob Geldof, Bono, 50, is the most high-profile musician-turned-advocate for developing countries and has lobbied world leaders at G8 summits to axe Third World debt.
Mrs Hewson, 49, became Edun’s public face and driving force, with Bono taking on a more advisory role.
The company made much of its agreements with farmers in Northern Uganda and production bases in Tunisia, Tanzania and Kenya as a sign it was committed to Africa.
But it soon ran into problems with sourcing and delivery: shipments arrived late and retailers complained about the fit and design.
Edun also felt the pinch of the recession and, from a peak of hundreds of stores in 2006, its shirts, jackets, bags and T-shirts were sold at just 67 shops around the world last year.
Mrs Hewson considered closing but worked out a deal with a Chinese manufacturer and sold a 49 per cent stake last year to luxury goods maker LVMH Moët Hennessy Louis Vuitton for about $7.8million (£5.08million).
According to U.S. reports, almost all the items at Edun’s New York Fashion Week show were made in China, not Africa.
“We focused too much on the mission in the beginning,’ she said in an interview. ‘It’s the clothes, it’s the product. It’s a fashion company.
At the end of last year Bono, and his wife of 28 years, Ali, moved their family from Dublin to New York to help launch the ethical clothing line based in Tribeca, Manhattan.
Ali has now revealed that the business has so far failed to make a profit.
“It hasn’t made money — it hasn’t made a profit yet,” said Ali. “But it’s growing. It’s growing.
“The first five years of the company is about putting money in and building the trade. So of course we had to support it. We’re still here supporting it now, because we believe in it.”
In fact the Hewson family believed so entirely in the project that they all moved to New York to be closer to the day to day running of the business.
“I’ve been seeing how the operation was being upgraded on a daily, weekly basis,” she said.
“It’s been amazing to see how far it has come in six months.
In 2005 Bono, Ali and fashion designer Rogan Gregory founded the fashion line. However, Ali says that the mission to increase employment in developing regions of Africa has overshadowed the company itself.
Over the years Bono has endured some criticism for his constant involvement in charity campaigns. His critics feel that his methods are a little preachy and that he’s over exposed in the media. However Ali defends his ongoing charity activism.
“He’s always known, if you want to get anything done you’ve got to stand in the firing line sometimes…He doesn’t do it for the warm fuzzy feelings. He does it to actually bring some change about, and highlight issues that were being pushed under the carpet. And he does it very effectively.
“Bono will say to you, ‘I’m sick of Bono, and I am Bono’.”
Just three years ago Edun had $3.6 million in bank loans and owes it’s three shareholders $7.9 million.
Ali feels that the situation for the company can only get better as the Hewson’s partnered up with LVMH, who owns Givenchy, Moet & Chandon, Louis Vuitton, Fendi and Christian Dior.
Edun’s plans to have a line of clothing ready for the soccer World Cup this summer designed but children in the slums in Nairobi.