The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
LVMH will double down on efforts to control working conditions in its supply chain and intensify its strategy of vertical integration in the wake of an Italian investigation that linked Dior to sweatshop labour, chief financial officer Jean-Jacques Guiony said Tuesday.
The luxury giant said it was unaware of the issues in its supply chain, despite ongoing efforts to increase auditing and monitoring of external manufacturers.
”We accept full responsibility for what happened,” Guiony told analysts on a call for the company’s first-half earnings. “We thought we were doing quite a lot already and we will intensify.” In particular, LVMH will look to increase vertical integration at Dior, which outsources more of its production than flagship label Louis Vuitton.
”This strategy didn’t begin yesterday; we’ve been implementing it for quite a while and will continue to do so and hopefully intensify and make it faster than we had in mind,” Guiony said. “That’s not easy to do, but the current situation requires further investment on that front.”
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LVMH has faced mounting pressure to address the scandal since it was first swept up in a labour exploitation probe led by prosecutors in Milan. Armani has also faced sanction for failing to adequately monitor its supply chain and actions against more fashion companies are expected to follow in the coming months. Last week, Italy’s Competition Authority said it was conducting its own investigation into whether Dior and Armani misled consumers with commitments to ethics and craftsmanship.
Earlier on Tuesday, Reuters reported that some investors are pushing for LVMH to do more to address the issues.
Learn more:
Investors Pressure LVMH on Labour Rights After Dior Linked to Italian Sweatshops
Some shareholders are asking the luxury giant to take more aggressive steps to monitor its supply chain after Italian prosecutors alleged factories manufacturing for Dior exploited workers.
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.
