Dior, Armani buys bags worth Rs 4,700 and Rs 8,300 from suppliers, resell it for lakhs: Report

Dior, owned by luxury giant LVMH, did not comment on the report. (Image credit: Reuters)

A series of raids and an investigation into luxury brands in Italy have revealed that Dior has been paying suppliers 53 euros (about Rs 4,700) per handbag and then selling it for 2,600 euros (Rs 2.34 lakh) in its stores, Wall Street Journal reported.

The investigation also revealed that bags from another luxury brand, Armani, initially bought for 93 euros (Rs 8,400) from suppliers, are resold to the brand for 250 euros (Rs 22,500) and subsequently priced around 1,800 euros (Rs 1.6 lakh) in stores. These costs, however, exclude expenses for materials like leather, with additional expenditures covered separately for design, distribution, and marketing, the publication stated.

This has led to severe criticism of the luxury companies with the prosecutors slamming them for failing to oversee their supply chain. But while the companies do not face charges related to these findings, some of the independently owned suppliers could face charges for exploiting workers and employing them without proper documentation. At least two illegal immigrants and seven employees who were recruited off the books were found at these workshops.

The report also said that inspections by Italian police in March and April found workers subject to “hygiene and health conditions that are below the minimum required by an ethical approach.” Investigators also found that the workers operated machines from which safety devices had been removed to increase productivity, thus compromising their safety. These staff were made to live at the workshop and typically worked from dawn until after 9 pm, including on weekends and holidays.

Meanwhile, Dior, owned by luxury giant LVMH, did not comment on the report. Armani, on the other hand, said it had “control and prevention measures in place to minimise abuses in the supply chain” and was “collaborating with the utmost transparency” with authorities, the Wall Street Journal report stated.