- The Italian police raided some of LVMH’s Dior suppliers that make luxury handbags.
- Italian prosecutors found Dior paid $57 to produce bags retailing for $2,780.
- Judges placed Dior and Armani units under judicial administration for one year.
Two Italian luxury giants pay just a small amount to produce handbags that retail for thousands of dollars, according to documents in a sweeping investigation of subcontractors.
Italian prosecutors in Milan investigated the LVMH subsidiary Dior’s use of third-party suppliers in recent months. Prosecutors said these companies exploited workers to pump out bags for a small fraction of their store price.
Citing documents examined by authorities, Reuters reported last month that Dior paid a supplier $57 to produce bags that retailed for about $2,780. The costs do not include raw materials such as leather.