Luxury fashion groups are facing higher inventory costs due to an EU ban on destroying unsold clothing, accessories and footwear, which has now come into force.
As of July 19, large companies including LVMH, Prada, Chanel and Zara owner Inditex are prohibited from incinerating or sending unsold products to landfill.
The rules also cover customer returns and force fashion retailers to prioritise selling products through discounts or alternative markets, donating them or preparing them for reuse.
The ban creates a particular challenge for luxury brands, which use tightly controlled distribution and scarcity to protect their image and pricing.
The companies now face a choice between holding more inventory, expanding controlled discount channels or reducing production.
The measure was introduced under the EU’s Ecodesign for Sustainable Products Regulation, which was approved in 2024 to cut overproduction and keep valuable materials in circulation.
Destruction remains permitted in limited circumstances including when products are unsafe, counterfeit, infringe intellectual property rights or are damaged beyond viable repair.
Companies using an exemption must provide evidence, publish annual reports on discarded goods and keep supporting records for five years. National authorities can impose fines for breaches.
Medium-sized businesses will become subject to the ban in 2030, while small and microbusinesses are exempt.
Between four per cent and nine per cent of textile products placed on the European market are destroyed before use, according to the European Commission.
This amounts to an estimated 264,000 to 594,000 tonnes of textiles each year, although no public figures show how much comes from luxury companies compared with fast-fashion retailers.
The new restrictions follow a Hong Kong court case which revealed that Chanel had routinely destroyed thousands of unsold products as part of its inventory management.
Chanel says the figures cited in the case do not reflect its current global practices. Products that cannot be sold now pass through L’Atelier des Matières, its recycling business launched in 2019 to recover materials for circular supply chains.
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