On January 10th, there was a view of a Chanel store in a department store in downtown Seoul. News1.
The operating profit of the French luxury company Chanel fell by 30% last year compared to the previous year.
According to AFP, Bloomberg, and the Financial Times (FT) on the 20th (local time), Chanel announced that last year’s sales amounted to $18.7 billion (26.1 trillion won), a decrease of 4.3% from the previous year, and operating profit was $4.5 billion (6 trillion won), down 30%. Net profit fell by 28% to $3.4 billion (4.7 trillion won).
It’s the first time since 2020, when stores closed due to the COVID-19 pandemic, that Chanel’s annual sales and operating profit have declined simultaneously.
Sales in the Asian region, including China, decreased by 7.1% to $9.2 billion (12.8 trillion won) compared to the previous year, driving the overall decline in sales. The luxury market is slowing as Chinese shoppers are buying fewer high-priced products.
Chanel CEO Leena Nair stated in a statement, “The challenging macroeconomic environment has impacted sales in some markets.”
This is the performance before the tariff chaos from the Donald Trump U.S. administration, and the market environment this year remains tough.
However, Chanel plans to maintain the capital expenditure scale, which was $1.8 billion (about 2.5 trillion won) last year. Last year’s capital expenditure was 43% higher than in 2023.
Chanel plans to open 48 new stores this year. Nearly half of these will be in the U.S. and China, with openings also in Mexico, India, and Canada.
Chanel has been raising prices in recent years.
According to HSBC bank analysts, the price of the Chanel Classic Flap Bag has more than doubled since 2019, reaching €10,000 (about 15.6 million won), which is higher than the average luxury price increase rate of 50%.
In response, CFO Philippe Blondiaux argued that the price hikes did not lead to a decrease in sales. He noted that last year, the average price increase rate for Chanel’s fashion products was about 3% and indicated the possibility of increasing prices this year in line with inflation.