An Italian court has placed LVMH group's high-end Italian cashmere firm Loro Piana under judicial administration for a year after allegedly uncovering worker abuse inside its supply chain, in the latest in a string of cases that have tainted the image of Italy's luxury brands.
Loro Piana Spa is the fifth fashion company to be targeted by the same Milan court for similar labour issues since 2023, according to the 26-page ruling reviewed by Reuters on Monday.
Units of fashion brands Valentino, LVMH's Dior, Italy's Armani, and Italian handbag company Alviero Martini were also placed under administration.
The court found that Loro Piana, which makes cashmere clothing, subcontracted its production through two front firms with no actual manufacturing capacity to Chinese-owned workshops in Italy that it said exploited workers.
The Milan court found Loro Piana "culpably failed" to adequately oversee its suppliers in order to pursue higher profits, according to the ruling.
The court in its ruling also appointed an external administrator to verify the company meets all the judges' demands on control of its supply chain.
Loro Piana declined to comment. LVMH was not immediately available for comment.
The administration will be lifted earlier if the unit brings its practices into line with legal requirements, as was the case with Dior, Armani and Alviero Martini previously targeted by the court.
LVMH, the world's biggest luxury group, acquired 80 per cent of Loro Piana in July 2013, leaving 20 per cent in the hands of the Italian family that founded the company.
In their ruling, the Milan judges wrote that despite the previous cases being widely reported "this production chain, headed by Loro Piana, has continued to operate until now".
In its ruling, the court also emphasises that this kept going even after representatives of Italy's fashion brands signed an accord in May with legal and political authorities to fight worker exploitation.
The owners of the contracting and subcontracting companies are under investigation by Milan prosecutors for exploiting workers and employing people off the books. Loro Piana Spa itself faces no criminal probe.
The prosecutors in the case said the violation of rules among fashion companies in Italy was "a generalised and consolidated manufacturing method".
Italy is home to thousands of small manufacturers that make up 50-55 per cent of global luxury goods production, consultancy Bain has calculated. Reuters
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