Gangmastering: Dior promises solutions, but doesn’t know “what happened”

LVMH promises solutions in response to the investigation by the Milan Public Prosecutor’s Office into gangmastering in the Dior supply chain, which was joined by the investigation by the Antitrust Authority. Solutions that, in large part, involve the vertical integration of suppliers. LVMH intends to send a message to investors who are asking for greater transparency on audits and internal purchasing practices. But what gives pause for thought is the statement, reported by the media, by LVMH CFO Jean-Jacques Guiony, who, regarding the investigation into Dior, says: “We have no idea what happened. By La Conceria.

Investors’ concerns

Three investors told Reuters that they had asked LVMH to take more aggressive measures to monitor suppliers’ treatment of workers. LVMH’s chief financial officer did not gloss over the issue of gangmastering in a conference call with analysts on the first-half 2024 results: “We take full responsibility for what happened in Italy with Dior’s suppliers. However, we have no idea what happened,” the Borsa Italian website reported.

LVMH promises solutions

The second part of Guiony’s response concerns Dior’s vertical integration, which relies more on outsourcing than Louis Vuitton. “This strategy (of integrations, ed. ) did not start yesterday,” Guiony said, as quoted by BoF. “We have been implementing it for quite some time and we will continue to do so, hoping to intensify it and make it faster than we had in mind. It is not easy, but the situation requires further investment on this front.”

Acquire, but where

Increasing the vertical integration of suppliers means that Dior will pursue greater independence from external suppliers. Translated: the brand could acquire some important leather goods or shoe manufacturer (we imagine Italian). An operation to be implemented in a reasonably short time to give a timely response to consumers and investors, pending the outcome of the investigations.