An Italian court has placed LVMH group’s high-end Italian cashmere firm Loro Piana under judicial administration for one year after allegedly uncovering labor exploitation within its supply chain, marking the latest in a series of cases that have damaged the reputation of Italy’s luxury sector.

Loro Piana SpA is the fifth fashion company to be targeted by the same Milan court for similar labor violations since 2023, according to a 26-page ruling reviewed by Reuters on Monday.

Units of fashion brands Valentino, LVMH’s Dior, Italy’s Armani, and Italian handbag company Alviero Martini have also been placed under administration.

The court found that Loro Piana, known for its luxury cashmere garments, subcontracted production through two front companies with no actual manufacturing capacity to Chinese-owned workshops in Italy, which reportedly exploited workers.

According to the ruling, Loro Piana “culpably failed” to properly monitor its suppliers in order to pursue higher profits.

The Milan court also appointed an external administrator to ensure the company implements effective tools to monitor its supply chain and meet judicial requirements.

Loro Piana declined to comment. LVMH was not immediately available for comment.

The court stated that the administration period may end earlier if the brand aligns its practices with legal standards, as previously seen with Dior, Armani, and Alviero Martini.

LVMH, the world’s largest luxury group, acquired 80% of Loro Piana in July 2013, with the remaining 20% retained by the Italian family that founded the company.

In their ruling, Milan judges emphasized that despite widespread reporting of previous violations, “this production chain, headed by Loro Piana, has continued to operate until now.”

The court also highlighted that the issues persisted even after representatives of Italy’s fashion industry signed an agreement with political and legal authorities in May to combat worker exploitation.

The owners of the contracting and subcontracting firms are currently under investigation by Milan prosecutors for labor exploitation and employing undocumented workers. Loro Piana SpA itself is not under criminal investigation.

Prosecutors in the case described the violations as part of a “generalized and consolidated manufacturing method” across Italy’s fashion industry.

Italy is home to thousands of small manufacturers, which collectively account for an estimated 50%–55% of global luxury goods production, according to consulting firm Bain.