Luxury Brand Loro Piana Under Judicial Administration Amidst Labour Exploitation Allegations
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Luxury fashion brand Loro Piana, a subsidiary of LVMH, has been placed under judicial administration for one year by a Milan court following allegations of labour exploitation within its Italian supply chain.
Labour Exploitation Allegations
The court ruled that Loro Piana had failed to properly supervise its subcontractors, leading to labour violations through indirect suppliers. This makes Loro Piana the fifth luxury label to face such allegations since last year, joining the ranks of Dior, Valentino, Armani, and Alviero Martini.
Investigations conducted by Italy’s Carabinieri labour protection unit unveiled that one of the workshops had employed 10 Chinese workers, five of whom were undocumented. These workers were allegedly forced to work up to 90 hours per week and were paid only EUR4 per hour (US$4.6). They were also illegally housed at the site.
These allegations surfaced when a worker reported being assaulted over unpaid wages, leading to the arrest of the workshop owner and the closure of the facility.
Judicial Administration
Although Loro Piana is not subject to a criminal investigation, the court has appointed an external administrator to oversee improvements to the brand’s supply chain oversight. If the company demonstrates substantial progress, the judicial administration could be lifted early, as has happened in similar cases involving Dior and Armani.
Loro Piana has attributed these violations to unauthorised subcontracting. It was discovered that the company had outsourced work via two front companies to Chinese-owned workshops in Milan. These workshops lacked the necessary capacity for manufacturing.
The company has since severed ties with the supplier and pledged to reinforce its control and audit activities as a means of ensuring compliance with its ethical and quality standards.
Company Background
Loro Piana, acclaimed worldwide for its luxury cashmere and wool products, was acquired by LVMH in 2013. The founding family still retains a 20% stake in the company. This past June, Frederic Arnault, son of LVMH’s chairman and CEO Bernard Arnault, was appointed as the company’s CEO.
Questions & Answers
What led to the legal action against Loro Piana?
A worker reported being physically assaulted over unpaid wages, sparking an investigation that revealed labour violations within the company’s supply chain.
What measures has the court imposed on Loro Piana?
The court has appointed an external administrator to supervise reforms to the brand’s supply chain oversight. The company has also been placed under judicial administration for a year.
What steps has Loro Piana taken since the allegations surfaced?
Loro Piana has ended its relationship with the implicated supplier and committed to enhancing its control and audit activities to ensure compliance with its ethical and quality standards.