Louis Vuitton (LV) is a well-known brand acclaimed for its opulent fashion offerings, encompassing shoes, watches, jewelry, accessories, and sunglasses. With a global presence through 460 stores spanning across 50 countries, the company has achieved worldwide prestige.
Despite the luxury reputation and higher price points associated with LV products, it may come as a surprise that the brand chooses to dispose of all its unsold bags at the conclusion of each year. Rather than opting for alternatives such as modification or donation, LV instead resorts to incinerating these items—an unconventional approach with its own underlying reasoning.
This extreme measure is taken by the company to safeguard the exclusivity that has become synonymous with LV. By abstaining from selling these products at reduced prices, they maintain the brand’s aura of exclusivity. Additionally, another contributing factor to this practice stems from a US regulation known as “duty drawback.” According to this law, if an imported item is destroyed with prior customs notification after duty has been paid, the company becomes eligible to claim a refund on the duty.
Considering that Louis Vuitton bags are subject to substantial duty rates, averaging between 15-25 percent, the company manages to recuperate a portion of its losses through these duty refunds.