LONDON — Chanel’s little-talked-about system for destroying unsold goods is under the spotlight in Hong Kong, where two former warehouse staffers are on trial, accused of trying to steal 724 handbags and small leather goods that had already been earmarked for destruction.
In a High Court case that opened Tuesday, former warehouse supervisor Ng Yiu-lun and ex-employee Cheung Ka-wai pleaded not guilty to conspiracy to steal. Prosecutors say the pair worked with two warehouse workers during the attempt.
Chanel Hong Kong is said to destroy 10,000 to 20,000 discontinued products every six months as part of its business strategy.
According to the prosecutor’s office, the goods to be destroyed were boxed on the 23rd floor of the Goodman Interlink facility in Tsing Yi, then sent down to the fifth floor to be shredded.
Concerns arose in late 2016, when two warehouse workers, who reported to Ng, began volunteering for overtime in a way managers found unusual. CCTV footage from Jan. 20, 2017 allegedly showed the pair secretly packing merchandise into cardboard boxes and hiding them in a dark corner of the 23rd-floor warehouse.
Instead of stepping in immediately, Chanel told a warehouse manager to keep watching. On Feb. 1, CCTV reportedly captured the hidden boxes being sealed.
The next day, an unidentified man in a cap and mask, later identified as Cheung, was seen using pallet jacks with Ho to move 33 boxes on six pallets into a lift and down to an underground loading area, which required a password and key to access.
An assistant warehouse manager stopped Cheung by a truck and called the police. Officers said they found 123 wallets and 601 handbags inside the boxes, all of which should have been destroyed weeks earlier.
The destruction of unsold inventory is an open secret in fashion, even though exposure of the practice inevitably sparks public outrage.
In 2018, Burberry faced a major backlash after revealing it had destroyed $38 million worth of unsold clothing and cosmetics to prevent their resale on the gray market. The brand later said it would immediately stop destroying unsold goods and committed to reusing, repairing, donating, or recycling unsalable items.
The European Union revealed earlier this year that it is moving forward with its ban on destroying unsold clothing, footwear, and accessories.
The European Commission has adopted new measures under the Ecodesign for Sustainable Products Regulation, including requirements for companies to disclose the volumes of unsold consumer goods they write off as waste and clarifying the circumstances under which destruction is permissible, such as for safety reasons.
The prohibition, together with the delegated and implementing acts, will apply to large companies beginning Sunday. Medium-sized firms are poised to follow in 2030. Disclosure rules under the ESPR, which big businesses are already expected to comply with, will also take effect for their medium-sized counterparts in 2030.
WWD has reached out to Chanel for comment.
