CHANEL sales and profits to decrease for two years, +13% in 2019

CHANEL sales and profits to decrease for two years, +13% in 2019

Sales and profits will supposedly decrease in the next two years, after enjoying a fully rewarding 2019. CHANEL expect a remarkable downturn in sales and profits, both in 2020 and 2021. While speaking to Reuters, the French fashion house made public their (very positive) 2019 financial statements: 12.3 billion dollars, as profits increased by 13% at fixed rates of exchange and leather goods enjoyed a growth in double figures. Despite Covid-19, CHANEL have confirmed their investments in the supply chain, which they deem to be much more than strategic.

+13% in 2019

CHANEL announced that in 2019 their sales nearly reached 12.3 billion dollars, therefore increasing by 10% at current rates of exchange and rising by 13% at fixed rates of exchange. Operating profits amounted to 3.5 billion dollars (that is, +16.6%). Apparel collections went up by 28%. As regards leather goods and footwear, sales enjoyed a growth in double figures. During a telephone interview, granted to Reuters, Philippe Blondiaux, CHANEL Chief Financial Officer, made clear the company is not planning to change its strategies a great deal.

For example, they are going to say “no”, once again, to discounts in order to limit outstanding stocks. Nonetheless, as pointed out by the Financial Times, analysts expect a heavy downturn. “Since we settled our orders with suppliers in a timely manner, to some extent, we will not go through any problem supposedly. “Discounting or discarding for-sale inventories never belonged to CHANEL philosophy”, stated Blondiaux. It is no coincidence that CHANEL have slightly raised the price of their accessories “to adjust raw material costs and currency fluctuations”.

Sales and profits to decrease in the next two years

Blondiaux expects a “remarkable downturn”, this year, in CHANEL revenues and profits throughout 2020, despite a growth in double figures (more than 100% in a few cases) that boutiques have been enjoying since their reopening, after lockdown, in some countries. According to Reuters, CHANEL are still confident they will achieve some profits this year, though they are reducing, by over 25%, advertising investments and promotional sales; at the same time, they are optimizing production. “In our opinion, such global scenario will keep having negative effects on the luxury business in the next 18 to 24 months at least”, pointed out the manager.

Supply chain control

Blondiaux also confirmed the fashion brand’s investments in the supply chain vertical integration. CHANEL, reported Business of Fashion, control at least 35 of their suppliers: that is the key to their future. “Such control we have acquired over the last ten years is, to a large extent, something unique in the fashion industry”.

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