CHANEL full year 2024 revenues declined 4 percent

CHANEL profit plunged last year as the closely held company boosted spending on marketing to stay visible amid a luxury industry downturn. Operating profit slid 30% to $4.48 billion as revenue fell 4.3% on a comparable basis, it said in a statement Tuesday. The region that includes China — which generates about half of Chanel’s revenue — saw a 7.1% sales fall.

The slump came as the luxury market struggles to emerge from a period of sluggish growth caused in part by Chinese shoppers reining in costly purchases. The industry’s outlook has grown even gloomier after US President Donald Trump unveiled global tariffs last month. Even once thriving companies like LVMH Moët Hennessy Louis Vuitton SE have posted disappointing sales so far this year.

Chanel was hit hard by macroeconomic volatility last year, particularly in China, Chief Executive Officer Leena Nair said on a call with Bloomberg, shrugging off concerns that Chanel had been too greedy in the post-pandemic era with the prices for some of its most popular products, like the flap bag that now costs more than €10,000 ($11,245).

“Our 2024 performance followed a period of unprecedented growth for Chanel in which revenues nearly doubled over the previous three years,” Nair said.  Still, Chanel’s sales drop and collapse in profits are surprising since the label created over a century ago by Gabrielle “Coco” Chanel is considered among the most exclusive and resilient brands in the fashion industry, catering to the world’s wealthiest customers. Sales fell 4.2% in the Americas and gained 0.6% in Europe.

“A company of our size going through such a change of cycle, I think we have to adjust our structure in different places of the organization,” Chief Financial Officer Philippe Blondiaux said during the call. “We’re going to monitor costs very carefully to stabilize margins,” adding that Chanel expects headcount to be flat for this year after a 5.1% rise last year. Earlier this year, Chanel announced 70 job cuts in the US.

The privately held group spent about $2.4 billion in “brand support activities” last year, which slashed profits, Blondiaux said in the statement.  Chanel’s performance may have been compounded by other factors. The group’s fashion division saw the departure of its chief designer Virginie Viard in June. In December, the company named her successor, Matthieu Blazy, who is set to unveil his debut collection at the Paris fashion week in October.

Customers often curb spending on a brand when it’s going through a creative transition. It also can take around half a year for a designer’s new pieces to be commercialized, meaning the impact of Blazy’s creations may only be felt from next year. “We are not just focusing on the October collection, we’ll be looking at all the collections to come in the next few years because we know a vision takes time to unfold,” Nair said.

Separately, the company said it is holding off on increasing prices in the US for its fashion products pending a final decision on President Donald Trump’s tariffs.  Unlike some of its rivals, the company says it wants to wait for the outcome of discussions on the levies. Trump last month imposed an initial 10% tariff on products coming from the European Union, while pausing plans for a 20% levy until early July.

“We thought the best posture to take and the most responsible for sure is to wait to see what will be the final outcome of this decision,” Blondiaux said. “It’s way too early to decide now in this period of uncertainty.” Luxury industry majors like LVMH, Hermes International SCA and Cartier-owner Richemont SA have recently increased prices on their goods in the US.

Chanel invested in property, spending about $600 million last year alone, notably to buy a building on Paris’ swanky Avenue Montaigne where it has a store as well as another one on rue Cambon. Chanel also closed a deal for its its future flagship in New York, Blondiaux added, without disclosing the exact location.

Chanel’s board is headed by the 76-year-old Global Executive Chairman Alain Wertheimer, who co-owns the brand with his brother, Gerard. Their fortunes are estimated at about $42.3 billion each, according to the Bloomberg Billionaires Index.

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