Paris — Chanel, the iconic French luxury house known for
haute couture and timeless fragrances, reported a 4.3% drop in annual
revenue to $18.7 billion in 2024, marking its first decline since 2020. The
downturn comes amid global economic headwinds, including inflation and shifting
consumer demand across key markets.
Operating
Profit Down, But Long-Term Strategy Intact
Chanel’s operating profit fell by 30% to $4.5
billion, a figure the company still considers robust. “It remains a very
healthy level,” noted CFO Philippe Blondiaux. Despite the decline, Chanel
continues to focus on long-term growth, with major investments supporting its
transformation under new artistic director Matthieu Blazy.
“This follows a period of extraordinary growth where our revenues nearly doubled over the last three years,” said CEO Leena Nair. “We’re navigating global uncertainty, but our focus remains on what makes Chanel unique.”
Chanel
Boosts Investment Despite Market Headwinds
In a year that saw the luxury market contract under
pressure from inflation and geopolitical unrest, Chanel ramped up its capital
spending to a record $1.8 billion. This included the launch of 53 new
boutiques, largely standalone fragrance and beauty locations, and six
new fashion stores, including two in underpenetrated markets like China.
Looking ahead, Chanel plans to open 48
additional boutiques in 2025, reinforcing its direct-to-consumer retail
strategy and expanding brand presence in emerging markets.
Global
Expansion Targets Emerging Economies
With mature luxury markets such as China,
Europe, and the U.S. experiencing stagnation, Chanel is setting its sights
on new growth regions like India, Mexico, and Canada. India, in
particular, is seen as a high-potential market thanks to its strong economy and
cultural appreciation for artisanal craftsmanship.
Chanel recently opened its first beauty store in
Mumbai and forged a key distribution partnership with Indian e-commerce
leader Nykaa, signaling a deeper commitment to the region.
High-Spend
Marketing and Spectacular Shows Continue
In 2024, Chanel allocated $2.4 billion to
marketing, encompassing global advertising, product rollouts, and exclusive
client events. One of its standout moments was the Métiers d‘Art show in
Hangzhou, China — a spectacle that underscores Chanel’s continued focus on
brand prestige and cultural relevance.
Designer
Transition: Matthieu Blazy’s Debut on the Horizon
Following the departure of Virginie Viard, Chanel
maintained its six-show-per-year rhythm with collections developed by its
in-house studio. The company reports strong performance in ready-to-wear
fashion, now one of its fastest-growing segments.
This fall, Chanel will unveil its first collection
by Matthieu Blazy, formerly of Bottega Veneta. “He’s a generational
talent,” Nair said, praising his understanding of Chanel’s heritage and his
innovative approach to luxury materials. The brand is focused on long-term
vision over one-season impact, allowing Blazy time to immerse himself in
Chanel’s storied DNA.
Beauty
and Jewelry Shine, While Leather Goods Struggle
Chanel’s makeup and skincare lines led
growth in the beauty segment, followed by fragrance — buoyed by campaigns like
the debut of Margot Robbie for No. 5 and a new scent, Chance Eau
Splendide, the house’s first major fragrance launch in eight years.
The jewelry and watch division also reported
dynamic growth, thanks to popular pieces from the Coco Crush collection.
However, the decline in overall revenue appears tied to the underperformance of
leather goods, traditionally one of Chanel’s top profit drivers.
Price
Sensitivity Hits Leather Goods Amid Social Media Scrutiny
Luxury shoppers have pushed back against rising
handbag prices, and Chanel has not been immune. The price of its classic
Flap bag surpassed €10,000 ($11,000) in early 2024 — nearly double its 2019
price. Social media backlash around quality and value further impacted sales.
In response, Chanel has moderated its pricing
strategy. “Fashion price increases averaged just 3% last year — in line with or
below global inflation,” said Blondiaux. For 2025, the brand aims to continue
aligning price adjustments with economic trends.
A New
Chapter for Chanel Leather Goods
As Chanel seeks to reinvigorate its leather goods
category, it is placing renewed emphasis on design innovation, material
quality, and craftsmanship. “Matthieu Blazy has a distinct strength in
accessories,” Blondiaux said. “We’re building an ecosystem that fosters
creativity with the finest raw materials.”
The recent launch of the Chanel 25 handbag, fronted by global stars Dua Lipa and Jenny, has already generated strong buzz. “In luxury, authentic storytelling and craftsmanship resonate deeply,” said Nair. “And that’s where Chanel will continue to lead.”