The LVMH group is again in turbulence. His Italian subsidiary Loro Piana, known for cashmere and luxurious reluctance, was supervised by a court in Milan under supervision. This extraordinary decision illuminates the grievances of an often uncontrolled system of awarding order. It has already been criticized in other similar cases in the luxury industry.
Exploitation in broad daylight
It all started in May 2025. A Chinese worker, identified with the initials HX, was brutally attacked by his employer after requesting outstanding wages. The man was punched in the face with pipes and was unable to work for 45 days, reported the business medium L’Estenstiel de l’éco.
This incident triggered investigations by the Italian authorities. They uncovered an opaque chain of production. According to El País, Loro Piana trusted part of his orders from the Evergreen Fashion Group, who then passed it on to Sor-Man. The latter company awarded orders to illegal workshops in the Milan region. The often illegally employed workers worked there: up to ninety hours a week for four euros per hour. Some were accommodated in unsanitary sleeping halls on site.
Colossal margins and an “alarming inequality”
Court documents from which L’Essinte de l’éco quotes show a dizzying discrepancy between sales prices and actual costs. A Loro-Piana jacket that costs between 1,900 and 3,000 euros in the shop caused only 118 euros in production. The end contractor, a small Italian company, received only 80 to 86 euros each.
In view of this mismatch, the judges denounced an “alarming inequality” between the colossal margins of the luxury houses and the ridiculous payment of the subcontractors. According to fashionnetwork, they accuse the luxury house manufacturer of “negligent” to have approved an opaque system of awarding order. This has indirectly promoted the exploitation of workers in need of protection.
For El País, this case is reminiscent of other youngest scandals in the industry. Fragmented and poorly controlled supply chains paved the way for abuse. The Moroccan Medium Hespress adds that these grievances represent a significant risk of image for the large houses. Consumers: Inside, transparency and traceability require.
Loro Piano received a judicial overseer
On July 14, 2025, the court in Milan Loro Piana put under supervision for one year. As the RSE magazine reports, it is not a criminal sanction. It is a correction measure to remedy the repeated failures of the brand when checking your value chain.
An independent supervisor was appointed to monitor the reform of the internal mechanisms. The judges: Inside, emphasized that the company has “relieved” a exploitation system due to a lack of controls, from which it has indirectly benefited, quotes El País.
A structural problem in the Italian luxury segment
Loro Piana is not an isolated case. In recent years, Dior, Armani, Valentino and Alviero Martini have been subjected to similar procedures in Italy, Le Monde recalls. The massive recourse to a cascading, sometimes hidden order allocation seems to be a structural practice in the industry. In 2024, Giorgio Armani was borne by the Italian competition authority for “misleading business practices” with a fine of 3.5 million euros, said Reuters. The discrepancy between its CSR rhetoric and the reality among its suppliers was criticized.
Effects on sales and share price
Since Loro Piana was placed under judicial supervision on July 14, 2025, the effects on sales and stock market performance of LVMH have been relatively low. In his annual report in the second quarter of 2025, LVMH announced a decline in sales of nine percent in his fashion and leather goods division at nine billion euros. The adjusted operational result fell by eighteen percent in the first half of the year. This trend is part of a global weakening of luxury consumption and does not only reflect the incident at Loro Piana.
On July 14, the LVMH share fell by 1.6 percent to EUR 480 after the forced administration of the subsidiary was announced. This decline interrupted a short -term upward trend. Analysts: However, the inside of the title is determined. Causes regarding corporate management and ESG conformity are the reason. In the following weeks, the title showed a gradual recovery: on August 16, it was traded for around 482 euros. This indicates that investors: inside begin to process the effects of the incident and to focus on the solid fundamental data from LVMH.
Outlook and corrective measures
LVMH reacted with increased internal audits. Relationships with the suppliers involved in the misuse of practices: inside was ended. The Loro Piana case is related to more comprehensive vulnerabilities in the supply chains of the Italian luxury segment. Other brands such as Dior and Armani were also under forced supervision for similar reasons.
The court in Milan ordered a one -year supervision for Loro Piana to reform the internal practices. If the company implements the necessary measures, this decision could be canceled before the deadline has expired, Reuters and The Financial Times report.
At the same time, the Italian authorities announced the introduction of a certification system for suppliers of the textile industry. This measure aims to restore the credibility of the “Made in Italy” label and could ultimately also be applied to the luxury sector.
In addition to the Loro Piana case, this matter illustrates a structural problem. As Vogue Business states, the recent revelations are not isolated cases. They are symptoms of a deep weak point: fragmented, difficult to test and often opaque supply chains. Despite the CSR obligations announced by the large brands, the traditional control instruments reach their limits.
This article was used with digital tools translated.
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