Even Chanel is feeling the strain, but its future lies in leather goods. “You know that Matthieu (Blazy, ed.) has a particular expertise in accessories. So we are doing everything possible to provide the best ecosystem in terms of high-quality leather and the finest raw materials to truly support his creativity”, said Chanel’s Chief Financial Officer, Philippe Blondiaux. With this strategy, the French fashion house aims to return to growth in both revenue and profitability after a difficult 2024.
Chanel under pressure
Despite continued reassurances from its executives, 2024 has proven to be a challenging year for Chanel. Revenues fell to USD 18.7 billion, down 4.3% at constant exchange rates compared to 2023, largely due to a slowdown in the Chinese market. Operating profit dropped 30%, from USD 6.4 billion to USD 4.5 billion. According to Business of Fashion, since Chanel’s executives reported growth in other segments, the decline in revenue may be largely attributed to the leather goods division—traditionally a cornerstone of the maison’s profits. In an effort to reverse this trend, the brand is taking two key steps: slowing down price increases and enhancing the value proposition of its leather products through marketing, innovation, and refreshed design.
Future investments
Chanel has stated that it will not scale back investment levels in 2025, having already spent USD 1.8 billion in capital expenditure during 2024. The company plans to invest USD 600 million into its supply chain, internalising more of its production. Some acquisitions have already been made, including Leo France, Grey Mer, and Mantero Seta. Further investment is planned in retail, with the opening of 48 new boutiques, mainly in China and the United States, but also in emerging markets such as India, Mexico, and Canada. Spending on marketing, advertising, product launches and client events has reached USD 2.4 billion. “We remain committed to our investments because we always take a long-term approach”, said Chanel CEO Leena Nair. Meanwhile, Blondiaux confirmed that Chanel has no plans to launch a menswear line (source: Reuters).
Photo: Chanel
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