Chanel Defies Luxury Slowdown As Annual Sales Surge to $20 Billion

Chanel’s revenues rose 16 % excluding forex shifts to $19.7 billion in 2023, the French luxurious home stated Tuesday. Worth will increase drove up gross sales by round 9 %, whereas higher volumes accounted for the remainder, chief monetary officer Philippe Blondiaux stated.

Demand for Chanel’s quilted leather-based purses, Swiss-made watches and Bleu de Chanel fragrances held robust throughout classes all year long whilst demand slowed sharply for a lot of luxurious rivals. “Double digit progress throughout all classes continued into the ultimate quarter of 2023, the place we delivered a high line progress of 14 %,” Blondiaux stated.

Working income rose 11 % to $6.4 billion.

The document gross sales and income symbolize “a testomony to the desirability of Chanel’s creations and the sustained funding we’ve made in our model, in creating the ultimate luxury experience for our purchasers and in supporting our individuals to develop and develop,” chief govt Leena Nair instructed BoF.

Privately-held Chanel, luxurious’s second-biggest model by income, has ramped up capital investments in recent times because it seeks to solidify its place in a turbulent market: upgrading and increasing its shops, internalising provide chains and changing extra of its magnificence enterprise to retail after many years working the division on a wholesale mannequin.

“Within the final decade, we’ve got greater than doubled our income; we’ve got greater than doubled our headcount. And within the final 5 years, we’ve doubled the dimensions of our distribution community. In order that’s quite a lot of change internally, and also you’re working in what’s a quickly altering context globally, which is complicated. We see a number of crises on the planet,” Nair stated.

2023 capital investments of $1.2 billion included 47 further shops, 31 of which had been free-standing magnificence and perfume boutiques. Different new areas included revamped flagships for trend, watches and jewelry in Milan’s Montenapoleone and Los Angeles’ Rodeo Drive, in addition to increasing its “Chanel et Moi” after-sales service and restore community (extra typically referred to by purchasers as “Chanel spas”.

“My precedence together with my management crew is to proceed defending our differentiation and evolving as an iconic model and enterprise. And this implies defending the energy of our model and cherishing what makes us completely different, in addition to our freedom of creation,” Nair stated.

Advertising investments rose 20 % to $2.5 billion, leading to current efforts together with the primary perfume advertisements fronted by new “Bleu de Chanel” spokesperson Timothée Chalamet and for “Coco Mademoiselle” face Whitney Peak, in addition to a big-budget purse marketing campaign starring Brad Pitt and Penelope Cruz.

On-line Discourse

Regardless of main investments and blockbuster ends in 2023, the model has confronted criticism in 2024 as eye-popping value hikes appeared more and more out of step with slowing financial progress and extra frequent stories of high quality points. In March, costs for Chanel’s medium flap purses surpassed €10,000, nudging forward of a lot of Hermès’ Kelly and Birkin kinds at a second when TikTok was flooded with complaints of crooked stitches and unfastened {hardware}.

Whereas the model continues to “make investments relentlessly” in enhancing its manufacturing, “the numbers for 2023 affirm that our customers completely endorse the extent of high quality,” Blondiaux stated. Latest runway collections have additionally drawn blended reactions, together with a Could cruise outing in Marseille that was known as out for its unflattering styling.

“Collections will be kind of profitable, these items occur to any designer,” acknowledged Blondiaux, including: “However since Virginie [Viard] took over from Karl…the Chanel trend enterprise has been multiplied by 2.2. The Chanel ready-to-wear enterprise has been multiplied by 2.5, and the ready-to-wear enterprise final 12 months of Chanel grew by 23%.”

“I believe it’s a testomony to the standard of her assortment, to her creativity,” Blondiaux added.

“Judging social media, campaigns, and many others. is one measure — however once I take a look at measures of worker and buyer satisfaction, for instance, throughout all our boutiques, I see these numbers going up… After I take a look at model fairness research that we do, we see the numbers going up,” Nair stated. “However having stated that, we all the time keep humble as a model and are all the time prepared to take suggestions.”

Downturn Alternative

Rival teams LVMH and Richemont each reported gross sales that fell barely on a reported foundation within the first three months of the 12 months as luxurious demand cools following a multi-year surge. Hermès outperformed the market, with revenues rising 17 %.

“We can’t deny that 2024 might be a more difficult surroundings,” Blondiaux stated, declining to remark additional on the model’s present buying and selling.

Nonetheless, Chanel says it plans to speculate by means of the slowdown, growing capital expenditures by as a lot as 50 % at a time when many rivals are slashing budgets. “This era of slowdown, because it’s been characterised by a few of our rivals, will supply alternatives, whether or not it’s when it comes to actual property, boutiques, vertical integration of our provide chain, individuals,” Blondiaux stated.

Even amid a sluggish Chinese language economic system and with gross sales to Chinese language nationals rebounding overseas with the resumption of long-haul tourism, Blondiaux flagged Mainland China as a spotlight for progress.

“Now we have as we speak 18 trend boutiques in China, whereas most of our rivals have over 45 or 50, which suggests China remains to be a spot the place we will proceed to speculate, which is what we’re going to proceed to do,” Blondiaux stated.