‘We Expect Ebbs And Flows': Chanel's CEO On Why It's Investing Despite The Downturn

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Chanel is not immune to the global luxury downturn. The French luxury house's revenues decreased 4.3 per cent to $18.7 billion in 2024 (on a comparable basis at constant currency). Operating profit was down 30 per cent to $4.48 billion.

Chanel increased its capital expenditure by 43 per cent to a record $1.76 billion in 2024 and plans to maintain the same level of investment in 2025, said Philippe Blondiaux, global CFO, who was also on the call. "We'll invest a record high amount in the vertical integration of our supply chain this year — close to $600 million — and we'll continue to invest in the sustainable transformation of our business."

"We always set our own course, which is why last year we invested more than ever in our fundamentals," Nair continued. "We made a record level of investment in our boutique expansion, in our client experience, in our creative ecosystem and savoir-faire."

By region, Chanel's growth in 2024 was led by Europe (up 0.6 per cent). The Americas were down 4.2 per cent and Asia Pacific down 7.1 per cent. By category, the fashion business "experienced a more challenging context in mainland China, but this was partially offset by strong performance in Japan and Europe", according to a press release. Fragrance and beauty was driven by makeup and skincare, while the watches and fine jewellery division experienced "dynamic growth".

"The situation is extremely volatile, negotiations are underway. So we believe the most responsible posture we can take is to wait for the end of the discussion. When things are decided, we'll make a decision on this," Blondiaux said. "Just to take a step back in terms of pricing, last year the average price increase for fashion was 3 per cent globally, and it was more or less the same for all the product lines. We'll continue to monitor our prices in 2025 in line with global inflation."

Reference: See here