Brand protection without destruction: where recovered stock goes
Destruction settled where a garment appeared next. Contemporary reporting on the practice gives that channel control as the reason for it, and the commercial logic still holds. The route closed on 19 July 2026, when Article 25 of Regulation (EU) 2024/1781 began prohibiting large companies from destroying unsold apparel, clothing accessories and footwear listed at Annex VII. What remains is the decision set a brand was always making: which channel a piece re-enters, in which market, in what condition, carrying whose name, and with what record of where it went.
What destruction was actually protecting
Price architecture is the oldest reason. A garment surfacing heavily discounted in a channel the brand did not choose competes with the same brand at full price.
Duty treatment is the second, and narrower than usually described. Under Article 124(1)(f) of Regulation (EU) No 952/2013, the Union Customs Code, a customs debt is extinguished “where goods liable to import or export duty are destroyed under customs supervision or abandoned to the State”. It applies to an undischarged debt. Duty already paid on goods in free circulation is not refunded.
Counterfeit exposure runs underneath both. Clothing, footwear and leather goods accounted for 62 per cent of seized counterfeit goods in the OECD and EUIPO’s “Mapping Global Trade in Fakes 2025”, May 2025, on 2021 data. Those are the categories most exposed to counterfeit trade, which keeps the whereabouts of authentic goods a commercial question for a brand team.
One case is documented in a company’s own numbers. Burberry’s annual report for the financial year ended 31 March 2018 disclosed £28.6m of finished goods destroyed, against £26.9m the previous year, including £10.4m of beauty inventory. Reporting that disclosure on 6 September 2018, Fortune wrote that the practice “attempts to avoid flooding the market with marked-down products and to reclaim import taxes”, and recorded the company saying it destroyed only items carrying its trade mark and worked with companies to capture the energy from incineration. On the same day, Burberry announced it would stop destroying unsaleable products with immediate effect, saying it already reuses, repairs, donates or recycles them and would expand that work, with an exception for damaged, defective or expired beauty products where recycling is not an option.
That last detail is where the regulation has moved. Recital 55 of the ESPR states that destruction covers “recycling, other recovery and disposal”, and that “Preparation for reuse, including refurbishment and remanufacturing, should not be considered destruction.” Capturing energy from a destroyed garment now sits inside the prohibited conduct. What counts as destruction under the ban works through the definition.
What the derogation list actually contains
Brand image and exclusivity do not appear among the grounds on which a large company may still destroy unsold apparel. Commission Delegated Regulation (EU) 2026/296, applying from 19 July 2026, sets out ten derogations. They fall into a small number of families: product safety, non-compliance with law, intellectual property infringement, licence and contractual restrictions, unrepairable damage and defects, technical barriers to preparation for reuse, and products no recipient will take. Records are kept for five years, and the derogations that still permit destruction covers them all.
One of the ten repays close reading. It is available where a product cannot be prepared for reuse because labels, logos or other recognisable characteristics protected by intellectual property rights cannot be removed or made permanently inaccessible. Destruction on that ground opens only where removal is not technically possible. In the regulation’s own structure, taking a brand’s identifiers off a garment is the step before destruction. A house wanting distance between its name and a block of surplus has a route there that does not end in destruction.
The five levers, and what each one does
Channel choice carries the most weight. The Commission published its own list of alternatives to destroying unsold stock on 17 July 2026, and the options run to an own outlet or factory store, a brand-operated resale storefront, off-price and third-party clearance, B2B liquidation and inventory jobbers, donation to charities or social economy entities, and preparation for reuse.
What differs is how much a brand knows afterwards. Sale to an inventory jobber returns a small fraction of what the garment is worth and ends the brand’s sight of the piece at the invoice. What discounting and liquidation cost covers the value side.
Market of sale usually gets decided by default. A garment recovered where it sold stays inside the market that already bought it, so it does not surface somewhere the brand never traded. Recovering in the market where the stock sold covers the customs reasons.
A grading threshold is a commercial arrangement between the brand and whoever does the work, because no European or international standard covers the grading of returned or unsold garments. A brand can set its bar high enough that anything failing it never returns to a brand-facing channel.
Condition decides whether the other levers are open. Cleaning and conditioning, meaning stain removal, drying, ironing and final presentation, is what brings a piece back to the standard the brand’s name requires, with repair inside that work as a subset. Where the piece goes out without the name, label removal happens in the same preparation. What getting stock resale-ready involves shows the sequence.
The record of onward destination is the last of the five. A business relying on a derogation has to hold proof of that ground, such as documents or test results, and keep it for five years, per the Commission’s statement of 17 July 2026. Publishing what has been discarded is a separate duty that does not turn on a derogation.
A brand with its own outlet estate and resale storefront already holds several of these levers. What is left is narrower: stock not saleable in any of those channels without work, in a market where the brand has no one to do it.
Where trade mark law helps, and where it stops
Two of these decisions run into trade mark law, and the position on unsold stock is stronger than the historical practice suggests. Article 15 of Regulation (EU) 2017/1001 on the European Union trade mark, headed “Exhaustion of the rights conferred by an EU trade mark”, reads:
An EU trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent.
Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.
Stock never sold is not exhausted. The rights are intact and the proprietor decides the first placing on the market, so a brand’s hold over destination is strongest on the stock it used to destroy.
Consumer returns already sold in the EEA are exhausted, and trade mark law does not prevent their resale. Article 15(2) is the exception, and the example it names is a change or impairment in the condition of the goods. The state of a garment carrying a brand’s name is a legitimate interest recognised in the instrument itself, on a facts-based test well short of a veto.
The Court of Justice has recognised the reputational concern directly. In Copad SA v Christian Dior couture SA (C-59/08, 23 April 2009) it held that a proprietor can oppose resale of its luxury goods by a discount store which obtained them from a licensee in contravention of the licence agreement, where that contravention damages the allure and prestigious image bestowing on them an aura of luxury. Those were licence-breach facts, so the holding does not extend to goods the brand sold itself.
The limit on contractual channel discipline was settled earlier. In Peak Holding AB v Axolin-Elinor AB (C-16/03, 30 November 2004) the Court held that a stipulation of territorial restrictions on resale, made in the act of sale that first put the goods on the market in the EEA, concerns only the relations between the parties and cannot preclude exhaustion. A resale restriction in a clearance contract binds the counterparty, and does not follow the goods.
De-branding has limits of its own, and one is rarely stated. Removing labels does not restore trade mark rights over goods already sold, since exhaustion under Article 15(1) has occurred and label removal does not reverse it. It does not remove non-label recognisable characteristics, and the derogation wording itself distinguishes labels and logos from “other recognisable characteristics”, which is why a distinctive design stays identifiable after every label has been cut out. Requiring label removal as a condition of sale is something a brand can do, and how far it carries in a given arrangement is a question for counsel.
The control a brand still has over where stock goes
The anxiety is usually put as a fear of the grey market, meaning surplus surfacing at a price and in a place the brand did not choose. Destruction answered it by ending the question. Nothing replaces it with a guarantee. What is available is control the brand exercises one decision at a time and can evidence, running from channel and market through condition and identity to the record of onward destination. A route that produces that record is worth more to a compliance function than one that does not. The evidence trail behind circularity claims covers what the file holds.
Opera Garment Solutions recovers garments in the market where they sold, across the Netherlands, Spain and the UK, drawing on garment care expertise that already exists in each of them, cleaning and conditioning first, repair as a subset, to a threshold the brand sets. It gives a brand a single point of access to a network of professional garment care experts.
To see what recovery does to a block of stock, a first test box costs nothing, a 90-day pilot follows if the results warrant it, and the thresholds get set in a conversation.
Questions brand teams ask about recovered stock
Can a fashion brand still destroy unsold stock to protect its brand image?
No. Commission Delegated Regulation (EU) 2026/296 sets out ten derogations from the Article 25 destruction ban, and brand image and exclusivity are not among them. The grounds concern safety, legal non-compliance, intellectual property infringement, contractual and licence restrictions, unrepairable damage or defects, and products no recipient will accept.
Does removing the labels protect the brand?
Partly. Label and logo removal separates the garment from the name, so it cannot be marketed as brand stock or appear in a discount channel wearing the brand’s identity. It does not restore trade mark rights over goods already sold, and it does not remove non-label recognisable characteristics, so a distinctive design can stay identifiable after every label has gone.
Can a brand stop resale of goods it has already sold?
Generally no, once the goods were put on the market in the EEA by the proprietor or with consent. Article 15(1) of Regulation (EU) 2017/1001 exhausts the right. Article 15(2) preserves opposition where legitimate reasons exist, and names a change or impairment in the condition of the goods as its example.
What record does a brand need of where unsold stock went?
Where a derogation is relied on, the Commission’s position of 17 July 2026 is that a business has to hold proof of the ground, such as documents or test results, and keep it for five years. The separate duty to publish what has been discarded applies whether or not a derogation is used. Stock that goes to recovery instead of destruction sits outside the derogation file, and the receiving operator’s records evidence the destination.
References
- Regulation (EU) 2024/1781 of the European Parliament and of the Council of 13 June 2024 establishing a framework for the setting of ecodesign requirements for sustainable products, Article 25, Recital 55 and Annex VII, Official Journal of the European Union.
- Commission Delegated Regulation (EU) 2026/296, adopted 9 February 2026 as C(2026) 659, applying from 19 July 2026. Ten derogations at Article 2, five-year documentation retention at Article 3.
- Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark, Article 15.
- Regulation (EU) No 952/2013 laying down the Union Customs Code, Article 124(1)(f).
- Copad SA v Christian Dior couture SA, Case C-59/08, Court of Justice of the European Union, 23 April 2009.
- Peak Holding AB v Axolin-Elinor AB, Case C-16/03, Court of Justice of the European Union, 30 November 2004.
- European Commission, Directorate-General for Environment, statement on the prohibition on destroying unsold clothes, clothing accessories and footwear, 17 July 2026.
- OECD and EUIPO, “Mapping Global Trade in Fakes 2025”, May 2025, on 2021 data.
- Burberry Group plc, Annual Report and Accounts for the financial year ended 31 March 2018.
- Burberry plc, “Burberry ends practice of destroying unsaleable products”, 6 September 2018.
- Fortune, Grace Dobush, “Burberry Used to Burn Its Unsold Products. Now, It’s Giving Up the Practice (and Real Fur, Too)”, 6 September 2018.
( About the author )
Joanna Lambert
CEO & Co-Founder, Opera Garment Solutions
Joanna Lambert is CEO and co-founder of Opera Garment Solutions, which recovers returned, damaged and unsold clothing for fashion brands across the EU and the UK from hubs in the United Kingdom, the Netherlands and Spain. She writes on the EU destruction ban and on what returned stock is worth when it goes back to sale.