MILAN, Italy — Midway through March, Italian police raided a factory complex on a quiet street in a leafy suburb of Milan, 11 kilometres from the city’s via Montenapoleone luxury shopping district.

Inside the factory, they found nearly two dozen workers — several employed under the table — making leather bags and accessories for luxury giant Dior. Safety mechanisms had been removed from machinery to enable faster production, with work beginning early in the morning and continuing late into the night, according to court documents. In one instance, Dior paid the supplier €53 ($58) a piece to assemble a handbag it sold for €2,600, the documents said.

LVMH-owned Dior is just one of more than a dozen fashion companies swept up in the Italian investigation linking luxury brands to sweatshop labour. In April, an Armani Group subsidiary was sanctioned by the Court of Milan for failing to ensure its suppliers met Italian labour standards. Alviero Martini, a smaller brand known for its map-print bags, received similar treatment in January. (The company said its suppliers had illegally hired subcontractors). More actions against fashion companies manufacturing in Italy are expected to follow in the coming months.

The investigation threatens the luxury sector’s most precious asset — brand image — calling into question the veracity of the craftsmanship-soaked marketing narrative luxury players routinely use to bolster the perceived quality of their products, while painting labour exploitation as a mass market problem.

The threat comes at a precarious time for the luxury sector. Not only has the market cooled significantly since the heady days of the post-Covid luxury boom. But punchy price hikes amid reports of declining quality have put pressure on the perceived value of luxury products.

On Wednesday, Italy’s Competition Authority announced it had launched its own probe into whether Armani and Dior had misled consumers about their commitments to ethics, craftsmanship and quality in light of the police investigation.

Armani said it has always had measures in place to minimise the risk of supply chain abuses and that it believes the Competition Authority’s allegations “have no merit.” Dior said the initial investigation’s findings don’t reflect the way it operates and that it has stopped working with the suppliers identified by Italian authorities. “The house of Dior firmly condemns these unworthy acts which contradict its values and the code of conduct signed by these suppliers,” the company said in a statement published this week, adding that it is working to improve its supply chain oversight.

It also contested some of the findings in the case. The manufacturers in question weren’t producing women’s handbags, but partially assembling men’s leather goods, Dior said, describing characterisations of its production costs as “ridiculously low” as “erroneous.” “It should be noted that the profit margin of the house of Dior is entirely in line with that of the luxury industry,” the company said.

A Slow-Brewing Backlash

The sweatshop scandal has sparked a slow-brewing online backlash, fuelled in recent weeks by high-profile coverage in publications like The Financial Times and The Wall Street Journal. But it remains to be seen whether social media outrage will impact sales.

The coming week brings the sector’s first public accounting since the Dior news broke in early June — too late in the quarter for much to show up in the numbers when LVMH reports on Tuesday. Luxury investors are anyway currently far more concerned about the fact that Chinese consumers — long the sector’s biggest growth engine — are not shopping like they used to.

“The bigger picture is one of global demand. Right now that is the big topic,” said Adam Cochrane, an analyst at Deutsche Bank Research. “Given everything that’s going on in China, nobody is focused on this in the investment community.”

Judging by history, that’s a reasonable position to take. Luxury brands have largely managed to sidestep associations with poor labour practices that have dogged fast fashion, painting their high price points as both a function and a guarantee of their commitment to artisanal and ethical manufacturing.

Past scandals in Italy and elsewhere have done little to dent this image, quickly fading from collective consciousness, helped along by public commitments to ethical operations and selective investments upstream.

Bernstein analyst Luca Solca first wrote about the risks in Italy’s supply chains 15 years ago. Back then, luxury was in a similarly precarious position, buffeted by the fallout from the 2008 financial crisis. The sector “cannot afford a faux pas in ethical standards,” Solca wrote at the time, warning such missteps could engulf the sector in “a renewed ‘bonfire of the vanities.’”

Instead, Chinese demand stepped in and luxury entered a growth supercycle. If anything, many of the industry’s biggest players have shifted more towards high-margin mass production, while continuing to market their products as exclusive and artisanally crafted. Manufacturing in Italy burnishes this image, but large volumes of production are outsourced across thousands of small producers that make supply chains difficult to control.

“This practice of contractors and subcontractors is in place for a reason. It’s not by accident, it’s in order to reduce costs,” said Solca.

But could things play out differently this time?

‘Disillusioned with Luxury’

As in 2008, the scrutiny on luxury’s supply chain is not a standalone issue, but one of several pressure points putting cracks in luxury’s marketing facade. Soaring prices for high-end handbags already have critics grumbling vocally on social media about sticker shock amid reports of declining quality. Layer on allegations of labour exploitation and the reputational risks are mounting.

“Are people getting temporarily disillusioned with luxury, or is the illusion getting broken for good?” cult fashion Instagram account Diet Prada asked in a recent post referencing conversations around Dior’s alleged €53 handbag.

If luxury’s marketing mythology is indeed “broken,” the implications for the sector are serious.

“I don’t think there is any customer who buys luxury products who would consider it remotely acceptable that, at the price they’re paying for the products, there’s any chance of labour practices being wrong in the supply chain,” said Deutsche Bank’s Cochrane. “It would be a real fundamental risk… the sort of thing that can really change the direction of a brand unless it’s handled the right way.”

Regulators are also playing a bigger role than they have in the past. The investigation by Italy’s Competition Authority is a rare instance of luxury brands getting drawn into a wide-ranging greenwashing crackdown that has already snared numerous mass market players, including H&M Group, Boohoo and Asos. Though potential penalties ranging from €5,000 to €10 million are relatively small, incoming due diligence regulations could bring much more severe fines in the future.

Fixing the issues would require big investments to consolidate supply chains and bring more manufacturing in house. Alternatively, companies could pay suppliers more and step up monitoring and controls. Both have costs, but luxury brands enjoy sizable margins and could make cuts elsewhere to smooth out the impact of any increases.

Still, a real reckoning may only come if fallout from the scandal starts to show up in the bottom line.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.

Welcome back to Haul of Fame, your must-read beauty roundup for new products, new ideas and the tiniest temptation to ask JD Vance if he’s wearing guyliner. (He is… right?)

Included in today’s issue: Addiction Tokyo, Amika, Coach, Doré, Fendi, Gucci, Lancôme, MakeUp Eraser, Naturium, Olive & June, One/Size, Paula’s Choice, Rare Beauty, Voesh and Minions! Yay Minions!

But first…

In 2019, a new phrase began climbing on Google Trends: “skin barrier.”

Until then, the term — which basically just refers to the top layer of our skin — was a snoozy descriptor usually only heard in the dermatologist’s office. But as TikTok de-fanged scientific terms while widening their reach, that all changed. Sleeper brand CeraVe harnessed its gentle approach to the skin barrier to become a viral sensation. Calm-but-firm skin-fluencers like Hyram Yarbo and Dr. Muneeb got millions of views on TikTok posts explaining its importance. And brands that seemed miles away from the term — like the rave-fuelled Milk Makeup — began using it in their marketing materials.

Today, searches for “skin barrier” are higher than ever before, with nearly a 400 percent spike in just the past two years. You know what term has nearly the same trajectory? “Emotional boundaries.”

Just as “the skin barrier” became a cheat code for TikTok views about beauty, “emotional boundaries’' soared as a social media buzzword about mental health. As “boundaries’' became an online catch-all to define everything from petty annoyances to outright abuse — not to mention fodder for Reddit’s “Am I the A***hole” thread and restraining order requests alike — beauty brands like Dove, Glow Recipe and Lashology have all incorporated the term into their marketing speak. There’s even an “empath shield perfume” from indie brand Sage Goddess to help the wearer “maintain better boundaries.” Really.

As science and psychology become further flattened on social media, here’s my prediction: Boundaries and barriers will be further conflated and thus, further hijacked by brands looking to tap into their customers’ heads. A damaged skin barrier will continue to grow as a symbol of all the things invading our physical space — pollution, extreme heat, crammed aeroplanes, aggressive flirts — and eventually become a stand-in for personal boundaries themselves. Watching the news and feeling like we have so little control — over our bodies, our financial savings, our political future, our planet’s health — we’ll keep clinging to tiny pieces of agency as a way to stay sane. (And to stay well-moisturised, because in most creative industries, looking competent and being competent have never been more inseparable.)

Perhaps we cannot put a barrier up to shield ourselves from toxic fumes or toxic friendships. But investing in a skin cream or a mascara that claims to respect our personal space, and help protect our bodies from disruption? Sure.

What Else Is New

Skincare

On July 16, Paula’s Choice introduced Pro Retinaldehyde Dual-Retinoid Treatment — don’t get dizzy from all the words, it’s just a wrinkle cream. They’re saying it’s better because their retinal absorbs into the skin faster and more effectively than regular retinol, supercharging results.

Body and foot care brand Voesh debuted some fascinating “Gua Sha” Cleansing and Shampoo Bars on July 16. They’re solid soap bars, but shaped like lymphatic massage tools, so you can stimulate the scalp and skin in the shower, without buying anything besides the actual cleanser. By the time it melts down to a stub, you won’t get the massage benefits anymore — but you won’t get the clutter of “one more thing in the shower” either, which feels significant.

In retail news, e.l.f.-owned Naturium rolled into Ulta Beauty on July 16, with 43 products total. Three of them — Barrier Bounce moisturiser, Vitamin Bright eye cream and the new product Glow Getter body oil — are exclusive. Meanwhile, their $19 Vitamin C face wash continues to be the most effective summer cleanser I’ve ever used on sweaty skin. I’m annoyed with how good it is.

Also on the store floor, congrats to Doré, the skincare brand launched by photographer and all-around ace human Garance Doré, for launching in Sephora on July 17. The brand claims a 50 percent revenue growth since 2024, with just over $4 million in raised capital. I like their Botanical Cleansing Water better than Bioderma, even though that was the clear inspiration!

And Naked Sundays hit Ulta Beauty on July 18, with new shades of their CabanaGlow Drops.

Makeup

Rare Beauty’s Soft Touch Setting Powder and Baking Puff Duo — a powder and fuzzy pink applicator — hit Sephora shelves on July 17.

Shopping at Credo instead? LYS Beauty unveiled their Triple Fix Loose Setting Powder there on July 16, with seven shades. I’m a big fan of LYS founder Tisha Thompson because she’s managed to brand her “clean” beauty line with ultra-glam imagery that sometimes borders on camp, instead of the traditional plants-everywhere vibe that’s typical in the category. Her makeup feels like a party instead of an assignment.

Speaking of synthetic puffs, MakeUp Eraser’s new Minions collection dropped July 16, with seven little cartoon sponges. MakeUp Eraser claims they’re better for the planet because you can use them over and over — not nothing, considering all the disposable wipes out there! — and the press release for these guys came with the phrase “mom-hack,” as in, “mom-hack your way to less sticky skin, use these sponges with water on your kids after meals.” Interesting!

Lip liners continue to come in hot. On July 16, Lancôme introduced Lip Idôle Lip Shapers, a range of 12 matte lip pencils that claim waterproof, 8-hour wear.

One/Size launched Oil Sucker, its mattifying primer, on July 16. It promises to rebalance an oily complexion while mattifying, with 12 hours of wear. My favourite part of the product is the instructions: “For best results, allow the product to dry for 3 minutes while remaining expressionless.” Extroverts, the gauntlet has been thrown.

Addiction Tokyo introduced its Lip Balm Glow Tint on July 15. It’s a sheer lip tint available in 9 shades. My favourite is “Date at Opera,” which sounds like an Andrew Lloyd Weber stage direction, but is in fact a deep maroon gloss.

Speaking of gloss, here’s a weird one: On July 18, nail brand Olive & June rolled out a Lip Gloss Mani Collection, a new range of six nail polish shades inspired by the trending makeup product. How is it different from regular shimmery, shiny nail polish? Still unclear, but the shades — especially a slightly lavender hue called Passionfruit Gloss — are very cute.

Hair Care

Amika’s Bit Hit collection of volumising shampoo and conditioner launched on July 16, along with a new Rising Star volumising spray. If you’ve been watching the Dallas Cowboys cheerleader documentary on Netflix — or the women speaking at political rallies for either party — you know that bouncy barrel curls continue to dominate many American mood boards.

Fragrance

Would you like a $540 perfume? Meet Amouage Guidance 46 Extrait, which claims to be “a study in light and shade, fragility and strength, subtlety and ostentatiousness.” (As usual, I want whatever LSD these copywriters are on.) The fragrance claims its formula is 46 percent perfume oils, and says it comes from a “High Perfumery House,” which is an interesting attempt to align scent with high jewellery.

On July 14, Auden Lueur introduced its new candle scent, Maris. They say it’s “a scent that transports you to a cliff’s edge where the ocean meets the sky,” which is great, because after watching the news this week, the edge of a cliff is exactly where I want to be.

Jayson Tatum is the new face of Coach Men’s fragrance. The brand announced the deal on July 16, with a press release that used the word ‘basketball’ exactly zero times. That’s weird, because Mr. Tatum is the star power forward for the Boston Celtics. Anyway, as a Massachusetts native, I have no choice but to stan for this collab.

And Finally

Merit Beauty and Allyson Felix really smashed it with this treadmill beauty tutorial, huh?

Universal Standard’s value proposition has not changed since the brand launched in 2015: high-quality fashion that fits every woman, from size 00 to 40.

The New York-based label has stuck to this mantra even as the number of brands championing body diversity has dwindled in recent years. But it’s never faced a challenge like Ozempic.

Usage of the weight loss drug, and others like it, is surging, leading some forecasters to question whether today’s size ranges might someday be rendered obsolete. AI-based forecasting company Impact Analytics found in a report published earlier this year that in New York’s affluent Upper East Side neighbourhood, sales of women’s shirts in small sizes increased in 2024 by 12 percent, while sales of larger sizes decreased by the same rate.

Polina Veksler, chief executive and co-founder of Universal Standard, is not fazed. The brand has not seen any changes in size demand and its most popular size remains medium, or sizes 18-20, Veksler told BoF. The brand recently launched a new retail strategy, in which teams of stylists fly to different cities every weekend for private shopping appointments. The strategy is one reason why sales are up 20 percent this year, even as weight loss drugs become cheaper and easier to acquire.

“We’re living in a time when cultural trends are reverting back to promoting antiquated and unrealistic standards,” Veksler said. “But despite this setback, I’m certain that the future of fashion is rooted in size inclusivity. Our customers are there, and will continue to be there.”

A New Retail Format

Universal Standard’s biggest strength — its assortment of sizes — has always been its biggest weakness, well before the introduction of Ozempic.

The wide range of options makes fashion accessible to women historically underserved by the industry. In practice, however, it’s every merchandiser’s nightmare to devote enough floor space to carry 22 different sizes for every style.

“When we first launched, we did try to explore wholesale with major retailers and we quickly learned that most retailers refused to carry our full size range,” said Veksler, who founded the brand with the late Alex Waldman.

Matching size demand with the right supply is a common challenge for brands looking to produce and stock a more inclusive size assortment. Old Navy overhauled its million-dollar size inclusive programme after missteps in matching supply with size demand.

At one point, Universal Standard operated five of its own stores across the US, but shuttered all but the New York location when the pandemic struck. What had initially posed a threat to the business turned out to be an opportunity. Without storefronts, Veksler sought out creative solutions, she said.

The answer was “Universal Standard on Tour,” a travelling trunk show concept that the brand rolled out in 2022. The company books private appointments with shoppers in advance, allowing them to try nearly every style from a full assortment of samples. Customers then place their orders online, which relieves Universal Standard from having to transport inventory.

Last year, the brand visited 54 cities. This year, it’s on track to hit 80, including multiple excursions to some large markets. US on Tour generates about 15 percent of revenue, Veksler said, and has enabled the company to cut back on marketing costs by at least 30 percent, not including savings from eliminating most of its retail footprint. Purchases from the trunk show are on average three times higher in value than online orders and return rates are lower because shoppers can try everything on.

“This is a way to have a retail presence but without the overhead of renting a store,” Veksler told BoF. “With a store, it could take up to two years for it to be profitable. This allows us to be profitable with retail from day one.”

The Plus-Size Market in Turmoil

Despite its sustained growth, Universal Standard is not immune to the inherent difficulties that come with producing and merchandising plus-size fashion.

The concept of body positivity made great strides in the past decade. In the 2010s, fashion shows were finally casting plus-size models and early adopters enjoyed a certain cachet. At the time, the market itself was dominated by a few major mass players, including Lane Bryant and Old Navy.

Universal Standard was one of a handful of plus-size start-ups such as Eloquii, Dia & Co and 11 Honoré that raised venture capital to carve out a new category for more premium plus-size options.

But even as interest in the plus-size category swelled, operational challenges persisted. Providing a more robust range of sizes posed not only a challenge in inventory planning but also in the production stage, as larger sizes require different patterns for cutting each garment.

Many brands that embraced inclusive-sizing did not sustain their efforts for more than a few collections. In 2022, 11 Honoré, a luxury plus-size platform, was sold to Dia & Co. In the past year, both Dia & Co as well as Eloquii, which had been owned by Walmart since 2018, were acquired by conglomerate FullBeauty Brands.

Ozempic poses an even larger threat to the already-fragile market. But Veksler said size fluctuation has always been normal for her customers. In April, the brand expanded its exchange programme, offering customers free size-based exchanges. Over 400 products are eligible, including best-sellers and core pieces.

To further scale, the company is seeking a major retail partner with a large footprint of stores that can host Universal Standard’s styling appointments on a permanent basis.

“With a partner like Nordstrom or Anthropologie, Veksler said, “We can not only tap into the $100 billion [plus-size] market but also help these large retailers embrace size inclusivity that’s proven to be tricky.”