Loro Piana has been placed under judicial administration by a Milan court following allegations that the LVMH-owned company, known for its pricey white-soled loafers and vicuña fiber knitwear, subcontracted garment production to workshops involved in labor exploitation. The court ruling, which cites the use of unauthorized subcontractors and unsafe working conditions, marks the latest escalation of Italy’s ongoing crackdown on allegedly abusive labor practices within the luxury fashion supply chain.
According to new court filings, Loro Piana failed to properly oversee its suppliers and subcontracted work, including ties to a company reportedly connected to Chinese-owned workshops operating in Italy. These workshops, the court found, were involved in systematically exploiting workers. While Loro Piana itself is not the subject of a criminal investigation, the court determined that the brand “culpably failed” in its duty to monitor its supply chain, prioritizing profits over compliance.
The decision makes Loro Piana the fifth fashion label to fall under judicial supervision in Milan since 2023. Other affected brands have included units of Valentino, LVMH-owned Christian Dior, Giorgio Armani, and Alviero Martini. Notably, LVMH’s Dior and Italy’s Armani previously had similar oversight measures lifted after implementing corrective actions ahead of the court’s 12-month deadline.
Oversight and Industry Context
The Milan court has appointed an external administrator to oversee Loro Piana’s operations for up to one year. This administrator will monitor whether the brand implements effective compliance mechanisms to prevent further labor rights violations. The supervision period could be shortened if the brand swiftly aligns with legal and ethical standards – an outcome achieved by Dior and Armani in earlier cases.
Prosecutors investigating the matter described the labor abuses as part of a “generalized and consolidated manufacturing method” within Italy’s luxury production hubs. These hubs, composed of thousands of small and mid-sized suppliers, are estimated to produce over half of the world’s luxury goods. The court was particularly critical of the fact that Loro Piana’s supply chain continued to operate in this manner even after a May 2025 industry-wide agreement between fashion companies, legal authorities, and government agencies aimed at eradicating labor exploitation in Italy’s fashion manufacturing sector.
Loro Piana issued a statement saying that it “acknowledges the notification received from the Court of Milan’s Preventive Measure Section today regarding labor practices by undisclosed and unauthorized sub-contractors of one of its suppliers. In breach of its legal and contractual obligations, the supplier did not inform Loro Piana of the existence of these sub-contractors. Loro Piana was made aware of this situation on May 20th and, as a result, the Maison terminated all relations with the concerned supplier in less than 24 hours.”
It continued, “Loro Piana firmly condemns any illegal practices and reaffirms its unwavering commitment to upholding human rights and compliance with all applicable regulations throughout its supply chain. Loro Piana is committed to ensuring that all its suppliers comply with the Maison’s highest quality and ethical standards in line with its Code of Conduct. In this perspective, Loro Piana has been constantly reviewing and will continue to strengthen its control and audit activities.”
Still yet, the company shot down “reported cost figures” as “not representative of the amounts paid by Loro Piana to its supplier, nor do they consider the full value of all the elements, including, among others, raw materials and fabrics.” The company “expresses its full willingness to cooperate with the relevant authorities on this matter and intends to provide the utmost support for any further investigations.”
ESG Compliance and Investor Sentiment
The court’s intervention comes at a time when ESG compliance risks are becoming a central focus for luxury investors. Regulatory scrutiny of Italy’s industrial subcontracting networks has intensified, particularly around undocumented labor and poor working conditions. With LVMH under increasing pressure to demonstrate transparency and control across its sprawling portfolio of brands, the Loro Piana case could have wider implications for how the conglomerate is perceived by both regulators and investors.
Despite strong fundamentals (LVMH reported €12.6 billion in net income for 2024 and €20.3 billion in revenue for Q1 2025), the group is facing a convergence of challenges: slowing global demand, heightened regulatory oversight, and reputational headwinds, as well as data breaches that have exposed Louis Vuitton customer information in multiple regional markets.
LVMH’s immediate task will be to reinforce oversight across its entire Italian production network. A failure to address the structural weaknesses that allowed for repeated subcontractor violations could expose the group to broader legal and reputational risks. In the near term, investors will be closely watching for any public statement from LVMH or Loro Piana, as well as updates from the court-appointed administrator.
If the brand swiftly implements corrective measures and the administration is lifted early, as in the case of Dior, investor concerns may ease. But if further labor violations surface at other subsidiaries, LVMH could face intensified ESG scrutiny and a re-evaluation by ratings agencies and institutional investors.
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