A Bloomberg investigation uncovered concerns regarding the ethical sourcing and labor practices behind Loro Piana's luxury vicuña sweaters, which can retail for as much as $9,000. Andrea Barrientos, a 75-year-old subsistence farmer in the Peruvian Andes, volunteers her time alongside others from her village to herd wild vicuñas and shear their wool. The Indigenous community of Lucanas, whose sole customer for vicuña fiber is Loro Piana, receives approximately $280 for an amount of fiber equivalent to that used in a $9,000 sweater. This amount is reportedly insufficient to compensate Barrientos and other shearers for their work. Loro Piana is owned by the luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE, controlled by Bernard Arnault, who has a net worth of $202 billion.
This situation echoes other instances of exploitation in the luxury fashion industry, such as a recent court case in Milan revealing that workers producing $1,800 Armani handbags were paid as little as $2 to $3 an hour in substandard conditions. Congressman Robert Garcia has raised concerns about the Loro Piana situation, calling it "clear exploitation" and questioning why immense labor does not translate into benefit for the workers. He has requested answers from Loro Piana's chairman and CEO.
However, some analyses suggest that raw material costs typically constitute a very small percentage of the final sale price for most luxury goods. For Loro Piana vicuña products, the raw material accounts for only about 2-3% of the sales price. The decision of how to distribute earnings from the wool sale lies with the local community in Peru and its elected president, not Loro Piana. The challenges also include the lack of resources for communities like Lucanas to process the raw wool into yarn, which requires expensive machinery and expertise, preventing them from capturing more value in the supply chain. Critics of the Bloomberg report suggest it may sensationalize the issue by focusing solely on the top of the supply chain and potentially misattributing responsibility for worker compensation.
Beyond specific ethical concerns, the broader fashion industry faces significant financial pressures. Average tariff rates on U.S. apparel imports reached 35.1% in December 2025, up from 14.7% in January of the same year, impacting gross profit margins by 0.2% to 4.6% for major U.S. fashion companies in fiscal year 2025. Tariffs became the top business challenge for U.S. fashion brands in 2025, with 45% of executives citing sourcing costs as the primary pressure on economic models. Additionally, climate inaction could lead to a 34% drop in fashion industry profits by 2030, according to the Apparel Impact Institute.
Victoria's Secret projected a net tariff impact of $100 million in 2025, an increase of $50 million from prior guidance. Columbia Sportswear reported unmitigated tariff costs exceeding $30 million in 2025, representing roughly 3% to 4% of impact over two years. These figures highlight the significant financial headwinds facing the industry, alongside ethical sourcing and labor practice controversies.
