Latest news with #Blondiaux
Hypebeast
21-05-2025
- Business
- Hypebeast
Chanel's Sales Slid 4%, Forcing the House To Ease off of Price Hikes
Summary Chanel's sales have taken a fall for the first time since 2020, sliding 4.3% to $18.7 billion USD last year. The French luxury company saw operating profits decline 30% to $4.5 billion USD and with the slowdown, Chanel is now re-evaluating its price hikes. Previously gung ho about increased prices on its products, specifically its classic handbags, Chanel is expected to ease off of the price increases as well as investments into new markets like India, Mexico and Canada. BOFhas reported that CEO Leena Nair and CFO Philippe Blondiaux spoke about the 'challenging' luxury market as it tries to revamp its image under new creative directorMatthieu Blazy. According to Blondiaux, the decline in sales still puts Chanel in a 'very health level' as it gears up for a rebrand under the artistic direction of Blazy. Nair said, 'This performance followed a period of unprecedented growth in which revenues nearly doubled over the previous three years. It's a challenging time in the world…and it continues to be challenging.' Chanel still plans on opening 48 new boutiques this year. Nair said, 'We remain committed to our investments because we always take a long-term approach. We've navigated many ebbs and flows in these 100 years that we've been around, and we're using this moment always to focus, to double down on what makes us uniquely 'Chanel.'' The decline in sales have been largely in due to the lag in leather goods. While other sectors like watches and fine jewellery have seen a 'dynamic growth,' Chanel relies heavily on its leather goods category. Over the years, Chanel's sharp price hikes have been criticized by consumers for its steep incline that saw its iconic medium Flap handbags nearly double its price in 2019. The company has agree to pull back on the price increases with Blondiaux stating, 'The average pricing effect we had for fashion was 3% last year, which I'm sure you will agree was perfectly in line with global inflation, if not less than that. We intend to maintain more or less the same policy, which is to monitor our prices in line with global inflation in 2025.'
Business Times
20-05-2025
- Business
- Business Times
Chanel profit tumbles as luxury industry downturn hits sales
[PARIS] Chanel profit plunged last year as the closely held company splurged on expanding its retail network and marketing to remain visible amid a luxury industry downturn. Operating profit slid 30 per cent to US$4.48 billion as revenue fell 4.3 per cent on a comparable basis, it said on Tuesday (May 20). The region that includes China – which generates about half of Chanel's revenue – saw a 7.1 per cent sales fall. The slump came as the luxury market struggles to emerge from a period of sluggish growth caused in part by Chinese shoppers reining in costly purchases. The industry's outlook has grown even gloomier after US President Donald Trump unveiled global tariffs last month. Even once thriving companies such as LVMH Moet Hennessy Louis Vuitton have posted disappointing sales so far this year. Chanel was hit hard by macroeconomic volatility last year, particularly in China, chief executive officer Leena Nair said on a call with Bloomberg, shrugging off concerns that Chanel had been too greedy in the post-pandemic era with the prices for some of its most popular products, like the flap bag that now costs more than 10,000 euros (S$14,611). 'Our 2024 performance followed a period of unprecedented growth for Chanel in which revenues nearly doubled over the previous three years,' Nair said. Still, Chanel's sales drop and collapse in profits are surprising since the label created over a century ago by Gabrielle 'Coco' Chanel is considered among the most exclusive and resilient brands in the fashion industry, catering to the world's wealthiest customers. Sales fell 4.2 per cent in the Americas and gained 0.6 per cent in Europe. A NEWSLETTER FOR YOU Friday, 2 pm Lifestyle Our picks of the latest dining, travel and leisure options to treat yourself. Sign Up Sign Up 'A company of our size going through such a change of cycle, I think we have to adjust our structure in different places of the organisation,' chief financial officer Philippe Blondiaux said. 'We are going to monitor costs very carefully to stabilise margins,' adding that Chanel expects headcount to be flat for this year after a 5.1 per cent rise last year. Earlier this year, Chanel announced 70 job cuts in the US. In a bid to invest for the long term, Chanel last year boosted capital expenditures by 43 per cent to around US$1.8 billion, which slashed profits, Blondiaux said. Blondiaux said he expects to invest a similar amount this year. Chanel also spent on about US$2.4 billion in 'brand support activities' last year. The capex included about US$600 million in property acquisitions. Chanel notably bought a building on Paris' swanky Avenue Montaigne where it has a store as well as another one on rue Cambon. Chanel also closed a deal for its future flagship in New York, Blondiaux added, without disclosing the exact location. Chanel's performance may have been compounded by other factors. The group's fashion division saw the departure of its chief designer Virginie Viard in June. In December, the company named her successor, Matthieu Blazy, who is set to unveil his debut collection at the Paris fashion week in October. Customers often curb spending on a brand when it's going through a creative transition. It also can take around half a year for a designer's new pieces to be commercialised, meaning the impact of Blazy's creations may only be felt from next year. 'We are not just focusing on the October collection, we will be looking at all the collections to come in the next few years because we know a vision takes time to unfold,' Nair said. Separately, the company said it is holding off on increasing prices in the US for its fashion products pending a final decision on Trump's tariffs. Unlike some of its rivals, the company says it wants to wait for the outcome of discussions on the levies. Trump last month imposed an initial 10 per cent tariff on products coming from the European Union, while pausing plans for a 20 per cent levy until early July. 'We thought the best posture to take and the most responsible for sure is to wait to see what will be the final outcome of this decision,' Blondiaux said. 'It's way too early to decide now in this period of uncertainty.' Luxury industry majors such as LVMH, Hermes International and Cartier-owner Richemont have recently increased prices on their goods in the US. Chanel's board is headed by the 76-year-old global executive chairman Alain Wertheimer, who co-owns the brand with his brother, Gerard. Their fortunes are estimated at about US$42.3 billion each, according to the Bloomberg Billionaires Index. BLOOMBERG
Business of Fashion
20-05-2025
- Business
- Business of Fashion
Chanel Pulls Back on Price Hikes as Sales Fall 4%
PARIS — Chanel's annual revenues dropped for the first time since 2020, sliding 4.3 percent to $18.7 billion last year, the French couture and beauty giant said Tuesday. Operating profit fell 30 percent to $4.5 billion, still a 'very healthy level,' according to chief financial officer Philippe Blondiaux, as the brand prepares to relaunch its fashion image under new artistic director Matthieu Blazy. 'This performance followed a period of unprecedented growth in which revenues nearly doubled over the previous three years,' chief executive Leena Nair said. 'It's a challenging time in the world… and it continues to be challenging.' New Stores, New Markets Chanel maintained high investment levels during a difficult year for the luxury industry, in which geopolitical tensions and stubborn inflation contributed to a sharp downturn in demand for high-end products. 'We remain committed to our investments because we always take a long-term approach. We've navigated many ebbs and flows in these 100 years that we've been around, and we're using this moment always to focus, to double down on what makes us uniquely 'Chanel,'' Nair said. Record capital expenditures of $1.8 billion included the opening of 53 new boutiques — mostly standalone fragrance and beauty shops, as the brand invests in steadily ramping up direct sales in its cosmetics division. Six net fashion openings included two locations in China, where the brand remains 'very under distributed,' Blondiaux said. 48 more boutiques are planned to open this year. With major luxury markets like China, Europe and the US under pressure, Chanel is working to expand in new countries including Mexico, India and Canada. India is 'one of the most vibrant economies in the world,' Nair said, as well as being a place where there's 'a deeply held tradition of valuing and appreciating traditional craftsmanship.' Chanel's beauty division recently opened its first store in Mumbai as well as launching a distribution deal with local e-commerce and retail giant Nykaa. Marketing expenditure — including advertising, product launches and client events — totalled $2.4 billion as the company continued to host flashy brand spectacles, including staging a Métiers d'Art runway show at the West Lake in Hangzhou, China in December. Designer Transition Fashion demand hasn't been hurt by the recent spate of unsigned studio collections as Chanel continued to stage six shows per year following the exit of artistic director Virginie Viard last summer. In fact, ready-to-wear was one of the brand's fastest-growing categories last year, Blondiaux said. 'The studio has done an amazing job — you can see their depth of expertise, the sophistication,' Nair said. Still, the company is eager to unveil this autumn its first collection by Blazy, whom it hired from Bottega Veneta late last year. 'He's one of the most talented and gifted designers in a generation,' said Nair. 'His vision and understanding of the Chanel codes is fantastic. We were very impressed by his mastery of natural, luxurious materials, his commitment to craftsmanship, his commitment to products.' Chanel says the lengthy transition was necessary as the designer needs to work ahead on a pipeline of shows, not just his debut. 'Chanel is a brand which has such profound depth that it takes time to truly understand and immerse oneself… We're not focusing on what he's going to bring to one collection, but looking at the next many collections over the next few years. The vision takes time to unfold,' Nair said. Leather Goods Lag Makeup and skincare were the beauty division's strongest performers. Fragrance sales also grew as the brand rolled out its first 'No. 5' campaign starring the perfume's new ambassador, Margot Robbie, and worked to relaunch its 'Chance' range with a new flanker called 'Eau Splendide' (the brand's first new fragrance in eight years). Watches and fine jewellery experienced 'dynamic growth,' powered largely by its Coco Crush collection of cross-hatched jewellery, inspired by the brand's quilted accessories. Growing sales across ready-to-wear, beauty and jewellery suggest the decline in Chanel's overall revenues could be largely attributed to the core leather goods category, a key driver of Chanel's profits. As consumers across the luxury industry have balked at sharp price increases for handbags in recent years, Chanel's hikes have been particularly steep. Its iconic medium Flap handbags crossed the threshold of €10,000 ($11,000) early last year, nearly double their price in 2019. At the same time, viral videos citing quality issues with the bags proliferated on social media. The company has since pulled back on punchy price increases. 'The average pricing effect we had for fashion was 3 percent last year, which I'm sure you will agree was perfectly in line with global inflation, if not less than that,' Blondiaux said. 'We intend to maintain more or less the same policy, which is to monitor our prices in line with global inflation in 2025.' In addition to slowing down on price hikes, the brand is working to reinforce the value proposition of its leather goods through splashy marketing, novelty and revamped design. 'You know Matthieu has a particular expertise in accessories. So for the future we are doing everything we can to offer the best ecosystem in terms of high quality leather… the best quality raw materials to really foster his creativity,' Blondiaux added. 'We just launched our Chanel 25 handbag, and it's a huge success, fronted by Dua Lipa and Jenny — really buzzing,' Nair said. 'In luxury, the power of creation to delight and inspire clients, built with good storytelling that's authentic, built on good craftsmanship and with an understanding of clients' desires: it works.'
