Chanel profits decline as luxury slowdown hits sales
Luxury brand Chanel has experienced a decline in both sales and operating profit for the first time since the pandemic, as it seeks to redefine its image under new Creative Director Matthieu Blazy.
The company's operating profit dropped by nearly a third to $4.5 billion (£3.3 billion) in 2024, compared to the previous year.
Meanwhile, sales declined by 4.3% to $18.7 billion (£13.9 billion), driven largely by a 7.1% drop in Asia to $9.2 billion (£6.8 billion).
"Macroeconomic and geopolitical volatility is unquestionably challenging," Chanel’s Global Chief Executive Leena Nair told the Financial Times. "We’ve seen these conditions have an impact on sales in some markets."
The drop in profits occurred before any impact from US President Donald Trump’s tariff policies. Nair said she was "very cautious" for Chanel’s outlook in 2025, citing an environment that remains "extremely uncertain".
It comes as few luxury groups have emerged unscathed from the broader industry slowdown. Sales at LVMH declined 3% in the first quarter, while Kering’s sales dropped 14%, with Gucci taking the biggest hit.
Chanel has implemented some of the most significant price increases in the luxury sector in recent years. However, CFO Philippe Blondiaux acknowledged that the brand raised prices on its fashion products by about 3% in 2024, with a similar increase expected this year as it plans to slow the pace of its price hikes, particularly due to a slowdown in its leather goods sector.
"The average price increase for fashion was 3% last year, which, as you’ll agree, aligns with global inflation—if not slightly below it. We plan to maintain a similar approach going forward," said Blondiaux.
The trading update comes after Matthieu Blazy joined Chanel as its new Artistic Director last month, marking the first external appointment to the role since Karl Lagerfeld was employed to revamp the brand in 1983.
He had served as Creative Director for Bottega Veneta since 2021, following the exit of now-Burberry Chief Creative Officer Daniel Lee.
