Loro Piana opens Ghemme plant as €1.7bn luxury brand protects craftsmanship

Loro Piana has inaugurated a new 8,000-square-metre knitwear manufacturing facility in Ghemme, Piedmont, expanding one of the most strategically important parts of its Italian production network as chief executive Frédéric Arnault pushes the luxury house toward greater control over craftsmanship, supply and product quality.

The facility represents the largest industrial investment in Loro Piana’s history, according to reporting around the inauguration. It brings production, product operations and training infrastructure together at a site that has already been recruiting manufacturing, engineering and purchasing specialists ahead of the opening.

The investment arrives at an unusual point in the luxury cycle. Loro Piana continues to perform strongly even as parent LVMH’s broader Fashion & Leather Goods division reported a 1% organic revenue decline during the first half of 2026, although the division returned to 1% organic growth in the second quarter.

That divergence helps explain why Loro Piana is investing in physical production while many luxury companies remain cautious. The brand is not attempting simply to produce more units; it is increasing control over the technical skills and supply chain behind products whose scarcity and material quality form a large part of their pricing power.

Why does an 8,000-square-metre knitwear factory matter to a luxury brand?

Luxury manufacturing economics differ from mass-market apparel because production capacity is constrained as much by skilled labour and rare raw materials as by machinery. High-end cashmere knitwear can require specialised finishing, inspection and handling that are difficult to scale rapidly without affecting consistency.

Vertical integration gives Loro Piana more control over those processes. Bringing additional production in-house can reduce dependence on external suppliers while improving traceability, scheduling and the transmission of technical knowledge between design teams and manufacturing specialists.

That control becomes particularly important for products using expensive materials such as cashmere and double cashmere. Waste, quality defects or poorly managed production can destroy considerably more value per garment than in mainstream apparel.

The factory can therefore create value even if Loro Piana deliberately avoids using every square metre to maximise unit output. In luxury, the objective is often to protect quality and availability discipline rather than drive factories toward commodity-style volume utilisation.

Why is Loro Piana expanding when the wider luxury market remains difficult?

LVMH generated €38.6 billion of first-half 2026 revenue, up 2% organically, but reported revenue declined 3% because of currency and portfolio effects. Fashion & Leather Goods generated €18.15 billion and remained slightly down organically for the half year despite returning to growth during the second quarter.

Loro Piana was one of the maisons LVMH specifically highlighted for excellent performance. That distinction matters because demand for high-end luxury has become increasingly polarised, with the strongest brands and highest-income customers proving more resilient than aspirational consumers pressured by repeated price increases and weaker economic confidence.

Loro Piana’s strategy has leaned heavily into exclusivity rather than mass expansion. Frédéric Arnault has publicly argued against simply maximising sales of successful products when doing so could dilute scarcity and brand desirability.

Manufacturing investment therefore supports a quality strategy rather than contradicting it. More internal capability can allow the brand to improve control, reduce supplier risk and develop new products without necessarily flooding the market with significantly more units.

What do Loro Piana’s recent financial numbers say about the business?

Financial Times reporting puts 2025 Loro Piana revenue at approximately €1.72 billion, up 7.5%, while profit increased 12% to about €434 million. Those figures indicate that the brand has been growing profit faster than sales even before the new plant begins contributing to the industrial network.

The same reporting has placed Loro Piana’s enterprise value at around €11 billion, a dramatic increase from the valuation associated with LVMH’s original investment more than a decade ago. LVMH has continued increasing its ownership and now controls the overwhelming majority of the company.

Those economics explain why manufacturing capability can justify substantial investment. A luxury house generating hundreds of millions of euros of profit can afford to spend aggressively on quality, training and vertical integration when those investments protect long-term pricing power.

The risk is that expanding fixed industrial capacity makes the brand less flexible if luxury demand deteriorates materially. Loro Piana must therefore keep matching manufacturing investment to a strategy based on scarcity rather than assuming recent growth continues indefinitely.

Why is training part of the Ghemme investment?

Loro Piana’s Accademia dei Mestieri is being integrated into the new facility, placing skills development alongside production. That matters because craft expertise can become a bottleneck even when a company has ample capital for buildings and machinery.

Luxury groups across Europe face an ageing skilled workforce in several specialist trades. Training younger employees becomes essential if brands want to preserve techniques around knitwear, leatherwork, finishing and textile production over several decades.

Locating training inside an operating factory can also shorten the transition from classroom instruction to productive work. Trainees can learn around actual production systems while experienced craftspeople transmit skills that are difficult to document fully in manuals.

For Loro Piana, that capability is strategically defensive. A brand dependent on external labour markets for every specialised skill has less control over future capacity than one continuously developing its own manufacturing workforce.

How does the new factory fit Loro Piana’s broader production strategy?

Ghemme is focused on knitwear and jersey, but Loro Piana is also increasing capacity elsewhere. The company is preparing additional leather-goods manufacturing in Tuscany, indicating that vertical integration is extending across more than one product category.

This pattern suggests management wants more of the brand’s most valuable manufacturing knowledge held directly within the company. That can improve quality control and reduce exposure to supplier disruption, although it also increases responsibility for labour, compliance and factory utilisation.

The investment follows greater scrutiny across the luxury industry regarding subcontracting and supplier oversight. Bringing strategically important production closer to the company can make traceability easier, but direct ownership alone does not eliminate the need for rigorous controls across external suppliers that remain part of the value chain.

The strongest long-term outcome would be a hybrid model in which Loro Piana owns the most critical capabilities while maintaining carefully governed specialist suppliers for processes that benefit from external expertise.

What should determine whether the Ghemme investment succeeds?

The key metric is unlikely to be simple garment volume. Loro Piana will be better judged by whether the plant strengthens product quality, reduces production bottlenecks and supports growth without forcing the brand into overdistribution.

Employee development will provide another indicator. If the Accademia produces a reliable pipeline of skilled workers, the factory can protect capabilities whose value extends well beyond the physical asset itself.

Margins are equally important. Loro Piana’s recent profit growth suggests the brand has considerable pricing power, but vertical integration must ultimately preserve or improve that economics after depreciation, labour and factory costs are included.

The Ghemme facility therefore represents a different kind of capacity investment from a mass-market apparel factory. Its success depends not on how fast Loro Piana can fill shelves, but on whether tighter control over craft and manufacturing helps an already successful luxury house remain scarce, desirable and profitable while the wider luxury industry works through a more difficult demand environment.