Multiple government raids in Milan, Italy discovered that factories of companies like Dior (owned by LVMH) and Armani have been exploiting foreign-born laborers to produce their expensive clothing and accessories for cheap.
The prosecutors found that Dior paid a “supplier” roughly $57 (€53) to manufacture a handbag that it charges customers $2,780 (€2,600) for, according to the government report. Armani bags were sold to a supplier €93 per bag, resold to Armani for €250, and then listed on retail for €1,800.
The factories, all in Italy, were also manufacturing products for other high-end fashion brands.
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“Why does it cost so little to manufacture the product?” said Milan court system president Fabio Roia. “The brands need to ask themselves this question.”
Dior is a subsidiary of Bernard Arnault’s LVMH, a massive holding company of luxury brands. They declined to offer comment to the Wall Street Journal. Meanwhile, Armani said it “control and prevention measures in place to minimize abuses in the supply chain,” and that it was “collaborating with the utmost transparency” with officials.
The probe began due to criticisms of how the companies were neglecting to effectively monitor their supply chains. As of now, they do not face any charges due to the discoveries, but they could face further criminal investigations for labor exploitation and the employment of individuals without documentation.
Shane Devine is a writer covering politics and business for VT and a regular guest on The Unusual Suspects. Follow Shane’s work here.
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