Took me a while to find the actual rules: https://environment.ec.europa.eu/publications/commission-del...

Overall, seems reasonably sensible.

It's still ok to destroy products if (among many other reasons) "the product can reasonably be considered unacceptable for consumer use due to damage, including physical damage, deterioration or contamination, including hygiene issues, whether it is caused by consumers or occurs during the handling of the product [...] and repair and refurbishment are not technically feasible or cost-effective;" but cost-effective means "the cost of repairing or refurbishing a product not outweighing the total cost of destruction of that product and of [all] expenses of replacing that same product."

So essentially, they have to offer all the clothing for donation first, if nobody wants it, it can still be destroyed (that's one of the other exceptions).

Unfortunately another exception is if "it is technically unfeasible ... to remove ... labels, logos or recognisable product design or other characteristics that are ... protected by intellectual property rights". So a luxury brand can probably still go "well our design is protected and we don't want the poors wearing our fancy clothes".