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

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

Italian courts have responded to these findings by appointing trustees to oversee the production operations of Dior and Armani in Italy following investigations into allegations of labor exploitation.

Dior, under the umbrella of 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 minimize abuses in its supply chain.

Seemingly expensive bags

According to documents reviewed during the investigations, 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.

Dior forced people to work 24 hours

In a recent ruling, the Italian subsidiary of LVMH, the French luxury brand conglomerate that produces Dior bags, came under court scrutiny in early June after allegations of subcontracting to Chinese companies accused of violating labor rights.

Reuters reported that the 34-page court ruling stated that 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.

Moreover, the documents noted that safety devices on machines were removed to increase worker speed, illegally reducing production costs.

Consequently, while each Dior bag costs around 53 euros 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.

Armani seeks profit violating regulations

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, Armani Group stated they were striving to minimize supply chain abuses during that period.

Court documents also 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.