LVMH intends to expedite its supply chain strategy and enhance audits and controls, Chief Financial Officer Jean-Jacques Guiony recently announced, following investigations into an Italian subsidiary of the French luxury giant.
Italian prosecutors initiated an investigation into suppliers for LVMH’s second-largest fashion label, Dior, according to reports, after allegations of sweatshop-like conditions at subcontractors for the label came to light.
“We are going to speed up a strategy that we had been implementing for quite some time now,” Guiony said in response to an analyst’s question after reporting first-half earnings that slightly missed expectations. He noted that while the company was unaware of the alleged worker exploitation, it accepts full responsibility for the situation.
LVMH plans to increase the “vertical integration” of Dior’s supply chain, which Guiony mentioned is currently at a lower level compared to its Louis Vuitton label, which is around 60%. Vertical integration refers to a strategy where a company controls multiple stages of its production process and supply chain.
Guiony also emphasized that further investment is needed to improve supply chain controls.
