Did you know Dior bags cost only $57.4 to produce?

Recent reports from the Wall Street Journal have highlighted significant raids in Italy targeting the production of luxury goods by leading brands, including Christian Dior and Giorgio Armani.

Following these revelations, Italian courts have appointed trustees to oversee the production operations of both Dior and Armani in Italy due to investigations into allegations of labor exploitation.

Dior, part of the luxury conglomerate LVMH, has refrained from commenting on the specific allegations to the Wall Street Journal but has reportedly taken steps to address supply chain issues.

Meanwhile, Armani has asserted its commitment to transparency and collaboration with authorities to minimise abuses in its supply chain.

Documents reviewed during the investigations revealed that Dior paid suppliers approximately €53 per handbag, which it then retails for €2,600.

Similarly, Armani bags were sold to suppliers for €93, resold to Armani for €250, and subsequently priced around €1,800 in stores.

In a recent ruling, the Italian subsidiary of LVMH, which produces Dior bags, came under court scrutiny in early June after allegations of subcontracting to Chinese companies accused of violating labour rights.

According to a 34-page court ruling reported by Reuters, workers were forced to sleep at the workplace to ensure they worked “24 hours a day.” Electricity consumption data revealed uninterrupted production cycles, including holidays, further highlighting the operational demands. The documents also noted that safety devices on machines were removed to increase worker speed, illegally reducing production costs.

Consequently, while each Dior bag costs around €53 to produce, these items are subsequently sold in stores for €2,600. This ruling marks the third preventive measure taken by Milan’s court against Dior this year.

Similarly, last April, trustees were appointed to oversee a subsidiary of Armani amid accusations that the fashion group had not sufficiently audited its suppliers. In response, the Armani Group stated they were striving to minimise supply chain abuses during that period.

Court documents alleged that the violation of regulations was not an isolated incident among Italy’s production capacity fashion companies but rather a systematic pursuit of profit.

The appointment of trustees aims to ensure better oversight of brands’ production processes and improve working conditions.