PARIS — Dior on Wednesday tried to defuse a deepening public relations crisis over an Italian investigation into misconduct by some of its suppliers, saying it had stopped placing orders with the manufacturer in question and refuting some of the information that had been widely circulated in the media and sparked outrage on social media.
Following reports last month of an investigation into alleged worker exploitation at several Italian luxury goods manufacturers, the country’s competition authority said on Wednesday it had opened investigative procedures against several companies belonging to the Dior Group and Armani Group for possibly misleading consumers.
“Both companies may have made false statements about their ethics and social responsibility, particularly regarding working conditions and supplier compliance with laws and regulations,” the company said in a statement.
“Furthermore, these companies placed emphasis on craftsmanship and quality. However, to manufacture certain products and clothing accessories, these companies allegedly used materials from workshops and factories that employed workers who were underpaid,” the competition authority continued.
It added that employees were working long hours under poor health and safety conditions.
“The Armani Group confirms that an investigation has been opened regarding alleged unfair commercial practices linked to our organizational communications in the field of corporate social responsibility. The companies concerned will cooperate fully with the authorities, consider the allegations to be unfounded and are confident that a positive outcome will be reached after the investigation,” Armani said.
In a separate, more detailed statement, Dior said it had been notified of illegal activities at two suppliers responsible for partial assembly of men’s leather goods and was working with Italian authorities.
“Dior firmly condemns these immoral practices, which go against its values and the code of conduct signed by its suppliers, and which do not reflect the quality of its artisanal work or its long-standing ties to Italy,” the company said.
“We will not be placing any new orders with these suppliers going forward. Dior teams are committed to the continuous strengthening of existing procedures. Despite regular audits, these two suppliers had clearly managed to conceal these practices,” Dior added.
Dior’s reputation was tarnished by reports last month that some of its products were made in poor working conditions and that some bags cost just 53 euros to assemble but retail for around 2,600 euros.
The French luxury brand disputed the information.
“Some of the articles completely misstate the facts, firstly by stating that the supplier in question is only involved in the partial assembly of men’s leather goods, but also produces women’s handbags, and secondly by stating that the production costs of these bags are ridiculously low. It should be noted that Dior’s profit margins are fully in line with those of the luxury industry and are not at the levels these erroneous comments suggest,” it said.
“Dior continues to pursue the evolution of its artisanal products, including the consolidation of production in its own ateliers, and will continue to offer the best working conditions to all those who, with their great dedication and great know-how, contribute to the creation of Dior products of the highest quality,” it added.
The company noted that it has worked with Italy’s largest supplier for more than 30 years, helping to create 4,000 jobs.
Investigations over the past few years have revealed poor working conditions in thousands of factories run by Chinese immigrants, mainly in Prato, the historic heart of Italy’s textile industry, but the advent of social media, combined with growing investor interest in environmental, social and governance standards, has made the issue even more pressing for luxury brands.
—Contributed by Luisa Zargani
