Chanel Reports Strong Financial Performance with Double-Digit Growth

Key Takeaway

• Chanel's revenue surged 16% to $19.7 billion, driven by a 9% price hike and strong Asia-Pacific demand.
• Operating profit reached $6.4 billion, placing Chanel alongside luxury giants Hermes and LVMH in resilience.
• Chanel declared a £4.5 billion dividend for 2023 and plans significant real estate investments in key global cities.

Strong Financial Performance

Chanel Ltd. reported a robust financial performance for the past year, with revenue and profit both experiencing double-digit growth. The luxury brand's sales rose by 16% on a comparable basis, reaching $19.7 billion, while operating profit hit $6.4 billion. The Asia-Pacific region, which accounts for more than half of Chanel's total revenue, was the primary driver of this growth. Chief Financial Officer Philippe Blondiaux noted that the sales increase was driven by a 9% rise in pricing and a 7% increase in volumes.

The brand's strong performance places it alongside other major luxury groups such as Hermes International SCA and LVMH Moët Hennessy Louis Vuitton SE, which have also shown resilience amid cooling demand for high-end goods. Chanel's medium-size flap bag, for instance, now sells for more than €10,000 ($10,867) in France, reflecting years of steady price hikes.

Regional Sales Variations

While the Asia-Pacific region led Chanel's growth, the Americas region showed weaker performance, with sales increasing by only 2.4%. Higher inflation in the U.S. has curbed demand from aspirational customers, making the demand picture challenging over the last 18 months. However, Blondiaux expressed optimism that a rising stock market and improving macroeconomic conditions could lead to a rebound in the region.

Chanel's ownership by billionaire brothers Alain and Gerard Wertheimer, whose fortunes are estimated at about $47.7 billion each, adds another layer of financial stability to the brand. The company, founded in Paris but headquartered in London since 2018, reports its financial performance annually.

Dividend and Real Estate Investments

Chanel has recommended a final dividend of £4.5 billion ($5.7 billion) for 2023, a significant increase compared to the interim dividend of $1.68 billion for the previous year. In 2021, the payouts amounted to $5 billion, according to corporate filings. This move underscores the brand's strong financial health and commitment to rewarding its shareholders.

The brand is also making significant investments in real estate. Blondiaux mentioned that this year would see "more significant investments in real estate" in key locations such as New York, Paris, and secondary cities. The global market value of Chanel's properties stands at more than $7 billion, highlighting the brand's strategic focus on prime retail locations.

Management Quotes

• Philippe Blondiaux, CFO of Chanel:

  "The demand picture in the US has been challenging over the last 18 months... I’m hopeful that a rising stock market and improving macroeconomic conditions will lead to a rebound."

• Philippe Blondiaux, CFO of Chanel:

  "The CFO of Chanel is the happiest in the world to have Virginie as a designer."

• Leena Nair, CEO of Chanel:

  "Customers love the silhouette and fit of Viard’s creations."

• Philippe Blondiaux, CFO of Chanel:

  "We’re not very ambitious for sales in Paris during [the Olympic Games] period given the expected traffic challenges around the French capital."