Chanel's Revenue Returns To Double-Digit Growth Following Steep Pandemic Decline
Chanel’s CFO said that the brand’s profitability is “way ahead” of 2019 figures.
Chanel reported on Tuesday that revenues climbed by double digits in the first six months of 2021, keeping its full-year profit margin on track to return to pre-pandemic levels, according to WWD.
The company’s sales totalled $10.1 billion USD last year, an 18 percent decrease at comparable exchange rates and a larger deduction than those experienced by competing brands. Revenues at LVMH declined 16 percent in 2020, and Hermès experienced a mere 6 percent fall, in comparison.
Additionally, Chanel’s operating profit dropped 41.4 percent to just above $2 billion USD in the same period. Despite decreased revenues and profit, the brand spent $1.36 billion USD on “brand support activities” including advertising campaigns and runway presentations, as well as $1.12 billion USD on “capital expenditure investments” like storefront renovations, office updates and development for the artisanal workshops that create its high-end designs.
“One of the luxuries of being a privately owned luxury company is that we could prioritize protecting our employees and vulnerable supply chain partners even if we knew it would have a detrimental effect on short-term profitability and cash flow,” said Chanel’s chief financial officer, Philippe Blondiaux, to The New York Times. “It was the most challenging year ever for this company. But for us, the most important thing was to defend our values and way of doing business.”
Blondiaux reported that the company has experienced positive growth since last fall and cited that revenues between January and June 2021 escalated by double digits in comparison to the same timeframe in 2019. Originally, Blondiaux had forecasted that it would take up to two years to meet pre-pandemic numbers, according to WWD.
“I’m very happy to have been proven wrong on this forecast. And we are already not only back to 2019, but way ahead of our 2019 numbers, and it’s the same for our margin,” he told the outlet.
Assuming the brand’s financial trends are maintained, Chanel should report an operating profit margin between 28 and 29 percent for 2021, Blondiaux said.
In other fashion-business news, Aritzia recently acquired Canadian CYC Design Corporation’s Reigning Champ brand for $63 million USD.
