LVMH’s Dior regains full control of Italian unit after labour compliance overhaul

Image Courtesy: media.gq-magazin.de

An Italian court has lifted the special administrative controls imposed on Manufactures Dior SRL, an LVMH subsidiary, months ahead of schedule, due to the company’s rapid implementation of improved labour practices. As per reports, the Milan court had placed the Dior unit under a year-long administration in June 2024 following allegations of labour exploitation by Chinese-owned subcontractors producing Dior handbags.

The court stated that Dior’s unit had successfully adopted necessary organisational models and enhanced supplier control procedures within nine months. Notably, the company terminated relationships with high-risk suppliers and established court-approved best practices.

This decision marks the early termination of all three special administrations enforced by the Milan court on fashion brands last year, including Alviero Martini and an Armani unit. Dior expressed satisfaction with the ruling, emphasising its commitment to transparency, integrity, and respect throughout its supply chain, and highlighting the establishment of a new industry benchmark.

The original June ruling revealed that Manufactures Dior had outsourced production to four small suppliers employing 32 workers, including undocumented and illegal immigrants, in substandard working and living conditions.

The court acknowledged Dior’s proactive response, noting the company’s understanding of the situation and its use of the administration as an opportunity to strengthen internal controls.

Recent investigations by Italian magistrates, particularly the Milan prosecutor’s office, have exposed alleged labour exploitation in the luxury fashion supply chain. As a result, the Milan Court of Justice proposed a nationwide scheme in June to mandate increased supplier checks by luxury companies to ensure compliance with labour laws.

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