Chanel’s luxury glow dimmed last year, with the brand reporting a 4.3% dip in sales to $18.7 billion, the first decline since 2020. Operating profits took a sharper fall, dropping 30% to $4.5 billion.
The downturn is prompting Chanel to rethink its aggressive pricing, especially for its sought-after handbags, and scale back expansion efforts in new markets like India, Mexico, and Canada.
CEO Leena Nair acknowledged the market strain, explaining, “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.”
CFO Philippe Blondiaux added that the company is still at a “very healthy level” as it gears up for a creative rebrand under new artistic director Matthieu Blazy.
Leather goods, which are Chanel’s bread and butter, were the hardest hit, while watches and fine jewelry showed “dynamic growth.” The sharp price hikes over recent years drew criticism, with the iconic medium Flap bag nearly doubling in price since 2019. Chanel is now easing up, with Blondiaux noting, “The average pricing effect we had for fashion was 3% last year, which…was perfectly in line with global inflation.”
Still, Chanel isn’t pulling back completely. The brand plans to open 48 boutiques globally this year.
“We remain committed to our investments because we always take a long-term approach,” said Nair. “We’re using this moment to focus, to double down on what makes us uniquely ‘Chanel.’”
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