Louis Vuitton allegedly burns its old bags to keep the brand’s complete exclusivity.
As you may know, Louis Vuitton doesn’t have sales (at least not public sales) they either sell a product at a given price or discontinue it. This is to make sure that everybody pays the same price for an item. But before the burning, they organize private sales for Louis Vuitton employees that other LVMH employees can also attend sometimes.
So about twice a year, they will gather all of the discontinued items in all available sizes in a big warehouse and let the employees buy them at a very low price, even at cost! And under strict rules: you may buy gifts for someone but they track each item and if your gift ends up in Ebay they know who to ask.
The items are very carefully chosen by a dedicated team and may have been discontinued from stores for many years. But they will keep offering them to employees until they decide it’s not worth it anymore.
When this happens, they will effectively destroy them!