How Loro Piana Was Linked to Labour Exploitation

Loro Piana holds a rarified position in the luxury sector.

The hundred-year-old Italian cashmere label sells $2,000 sweaters that have become staples in the wardrobes of the world’s wealthiest. The brand was a regular feature on the television show “Succession,” whose billionaire protagonists helped popularise the trend for “quiet luxury.” Its status is closely linked to its Hermès-like reputation for using only top-quality materials and maintaining an obsessive commitment to artisanal craft.

But for years, thousands of Loro Piana’s cashmere jackets were made in illegal workshops on the outskirts of Milan, where undocumented migrant workers were forced to work up to 90 hours a week for as little as €4 ($4.67) an hour, according to court documents reviewed by BoF.

The allegations were published in a court ruling Monday, which placed Loro Piana under a year-long period of judicial administration for failing to adequately control and prevent exploitation within its supply chain.

The case is the latest in a series of labour investigations by Milanese prosecutors that have tainted luxury’s carefully-crafted image and fuelled consumer doubts about whether high-end brands are really worth their soaring price tags.

Brands including Dior, Armani and Valentino have all faced similar findings over the last year. But Loro Piano’s high-end positioning and once unassailable reputation for top-tier manufacturing makes the allegations against it particularly jarring.

According to the court, the cashmere label awarded production contracts to intermediaries with no real manufacturing capacity, turning a blind eye to subcontracting that meant its products were being made by local Chinese-owned workshops that prosecutors said exploited workers.

These practices continued despite intensified scrutiny of luxury’s supply chains as a result of the highly publicised investigations into other brands, said the court.

Loro Piana said it was only made aware that one of its suppliers was subcontracting to unauthorised producers in late May and immediately terminated the relationship. It added that it is committed to continually reviewing and strengthening its control and auditing processes. Majority owner LVMH did not comment.

A Blow to LVMH

The case is the second to snare one of LVMH’s major brands. Dior was released early from court supervision in February after enhancing its supply chain monitoring processes. It reached a separate settlement with Italy’s competition authority in May, when the consumer watchdog closed a probe into whether Dior misled consumers about working conditions at its suppliers without establishing any wrongdoing.

Loro Piana’s involvement is a blow to the group’s efforts to move beyond the scandal. It hits particularly hard because LVMH has long promoted the cashmere label’s control over its supply chain as central to its value proposition.

The French luxury giant acquired an 80-percent stake in Loro Piana in 2013 for €2 billion ($2.3 billion). At the time it was already one of the world’s largest producers of luxury textiles, known for its rare mastery over every step of the supply chain and ability to procure the finest baby cashmere from Mongolia and vicuña from Peru. Under LVMH, the label leveraged that legacy — maintaining its top-end reputation and pricing, while expanding into new categories like leather goods and modernising its image — to more than quadruple sales.

Last year, Loro Piana’s annual turnover exceeded €3 billion ($3.5 billion), estimates Bernstein analyst Luca Solca. That would make it LVMH’s third-largest fashion brand after Louis Vuitton and Dior. (The group doesn’t break out the performance of individual brands).

In March, Frédéric Arnault, one of five children of LVMH chairman Bernard Arnault, was named Loro Piana’s chief executive, his first position in the group’s key fashion and leather goods division. Now he will have to contend with the reputational fallout from the Italian probe.

The case is the second scandal to embroil the luxury cashmere label in as many years, after a 2024 Bloomberg investigation linked Loro Piana’s Peruvian vicuña supply chain to exploitation of indigenous labour. At the time, Loro Piana disputed the article’s conclusions and said it was committed to upholding the highest standards of ethical and responsible business practices.

Profits Over Worker Welfare

Illegal sweatshops are deeply embedded in the luxury industry’s operating model in Italy, according to the cases brought by Milan prosecutors.

Roughly half of the world’s luxury clothing and leather goods are made in Italy by thousands of small manufacturers, creating a complex and fragmented supply chain that is fiendishly difficult to police. Decades of pricing pressure, fuelled by intensifying competition from lower-cost global labour markets and the luxury industry’s gear-shift to a mass production model, has given rise to a cottage industry of illegal manufacturers that offer cut-prices services by disregarding labour laws and employing workers under the table.

Many of fashion’s top brands have turned a blind eye to this kind of labour exploitation in order to maximise profits, according to prosecutors in Milan.

Since the first cases against brands including Dior and Armani were made public last year, the luxury industry has been at pains to demonstrate it is taking action. Both Dior and Armani were released from court-appointed supervision early, after satisfying the court that they’d taken sufficient steps to intensify their supply chain controls. But in the more recent cases against Loro Piana and Valentino, prosecutors have made it clear the broader issues have persisted and remain deeply entrenched.

According to the Italian investigation, Loro Piana failed to carry out effective supply chain inspections for years. One of the brand’s intermediary suppliers told police they produced thousands of jackets a year for the company at a price of between €118 and €128 per item.

Loro Piana said the numbers do not reflect the amounts it paid to its supplier, or the full cost of production elements like raw material and fabrics. The brand routinely sells its jackets for more than €3,000 each.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.