LVMH Now Plans for More In House Production After Dior Scandal

LVMH will enhance efforts to control working conditions in its supply chain and intensify its vertical integration strategy following an Italian investigation linking Dior to sweatshop labor, CFO Jean-Jacques Guiony announced Tuesday.

Despite ongoing audits and monitoring, LVMH was unaware of these issues. “We accept full responsibility,” Guiony said during a first-half earnings call. The company will focus on increasing vertical integration at Dior, which outsources more production than Louis Vuitton.

The strategy, ongoing for some time, will now be expedited. LVMH faces pressure from a Milan labor probe and an Italian Competition Authority investigation into Dior and Armani’s ethical commitments. Some investors are also urging LVMH to take further action.

LVMH plans for more in house production

Unfortunately for the conglomerate, a number of their shoppers appear to be distancing themselves from specifically Dior. Furthermore, there are a number of allegations that Louis Vuitton themselves are declining in quality. 

Additionally, Loro Piana (another LVMH company) was recently in a scandal of its own, as they apparently did not pay their farmers in Peru. These brands are charging a large sum of money for products that may not last as long as they should. 

Recently, the conglomerate appeared to be struggling alongside Starbucks and Loreal according to Business Insider.  LVMH also announced a 13% decline in sales specifically in Asia. But, this trend is reflective in the industry as Kering, their competitor, announced a significant loss in sales as well. 

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