Published by Global Banking and Finance Review
Posted on May 15, 2025
By Emilio Parodi
MILAN (Reuters) -An Italian court has placed a unit of fashion brand Valentino under judicial administration for a year after uncovering worker abuse inside its supply chain, in the latest in a string of cases that have tainted the image of Italy's luxury brands.
Valentino Bags Lab Srl is the fourth fashion company to be targeted by the same Milan court for similar labour issues since 2023. An Italian unit of French luxury giant LVMH's Dior, Italy's Armani, and Italian handbag company Alviero Martini were also placed under administration.
The court found that Valentino Bags Lab, which makes Valentino-branded handbags and travel articles, subcontracted production to Chinese-owned firms in Italy that exploited workers, according to the 30-page ruling reviewed by Reuters.
The Milan court found it "culpably failed" to adequately oversee its suppliers in order to pursue higher profits.
The court will now appoint an external administrator to verify the company meets all the judges' demands that it implement effective tools to control its supply chain.
The administration will be lifted earlier if the unit brings its practices into line with legal requirements, as was the case with the three companies previously targeted by the court.
Valentino is majority-owned by Qatari investment fund Mayhoola. French fashion group Kering bought a 30% stake in the Italian brand in 2023, with an option to purchase the entire share capital by 2028.
Valentino, Valentino Bags Lab and Kering did not respond to Reuters' requests for comment. Mayhoola could not immediately be reached for comment.
In their ruling, the Milan judges wrote that despite the previous cases being widely reported "Valentino Bags Lab kept operating with suppliers who exploit workers and use labour in violation of safety regulations, without in any way increasing its control systems".
The prosecutors in the case said the violation of rules among fashion companies in Italy was "a generalised and consolidated manufacturing method".
Italy is home to thousands of small manufacturers that make up 50%-55% of global luxury goods production, consultancy Bain has calculated.
"After Armani and Dior, now Valentino... these things tarnish the 'Made in Italy' prestige," said Flavio Sciuccati, senior partner at consultancy The European House - Ambrosetti Group.
WORKING DAY AND NIGHT
Investigations by Italian magistrates have over the last years exposed widespread exploitation of workers in the fashion and luxury supply chain.
In the case against Valentino Bags Lab, Carabinieri police from the Milan labour protection unit inspected seven Chinese-owned workshops around the financial capital from March to December 2024, including one of the firms involved in the Dior case last year.
They identified 67 workers, nine of whom had no employment contract. Three were irregular immigrants.
Workers were made to sleep in the workplace in order to have "manpower available 24 hours a day", according to the ruling.
Electricity consumption mapped by investigators showed "seamless day-night production cycles, including during the holidays", the ruling shows. In addition, safety devices had been removed from the machinery to allow them to operate faster, it said.
One of the Chinese-owned contractors, Bags Milano Srl, had been working exclusively for Valentino Bags Lab since 2018, producing around 4,000 bags per month for between 35 and 75 euros ($39-$84) each, it said.
These same bags retail for between 1,900 and 2,200 euros, according to two judicial sources.
The judges said the owner of Bags Milano subcontracted the production of some of the Valentino bags to other Chinese-owned workshops.
According to the ruling, the owner said Valentino Bags Lab did not formally authorise this but was aware of it and "turned a blind eye" given how much work there was.
The owners of the contracting and subcontracting companies are under investigation by Milan prosecutors for exploiting workers and employing people off the books. Valentino Bags Lab itself faces no criminal probe.
Milan's court proposed a scheme in June 2024 under which luxury firms should strengthen checks on suppliers to ensure they respect labour laws.
($1 = 0.8926 euros)
(Reporting by Emilio Parodi, additional reporting by Silvia Ognibene, editing by Gavin Jones, Crispian Balmer, Lisa Jucca and Joe Bavier)
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