Despite Chanel’s sustained and increasing popularity, its revenues took a major hit in 2020. According to Chanel’s Limited Financial Results for the Year Ending December 31, 2020, revenues declined 18% compared to 2019 (at current currency). Operating profits sank 41.4% next to 2019. Nevertheless, Chanel’s capital expenditure spending on projects like its boutiques, ateliers, and sustainable and green effort, rose $1,120 million.
In terms of the decline, Chanel fared worse than rivals Louis Vuitton (down 16%) and Hermès (down 6%). One glaring reason is something we discuss frequently: Chanel’s refusal to sell its Ready-to-Wear and Handbags online. Apparently, sticking to that in-boutique experience has consequences, when boutiques are shuttered internationally.
Moreover, Chanel cites it’s high exposure to fragrance and beauty trends as another cause of revenue decline. Not only were these products in lower demand, but their sales are highly dependent on travel shopping, which was virtually non-existent.
The magnitude of the revenue decline also is striking against the backdrop of Chanel’s repeated and substantial price hikes during the pandemic. Certainly, those increases buoyed Chanel’s bottom line, at least to some extent.
In an interview with Business of Fashion, Chanel’s Chief Financial Officer Philippe Blondiaux remarked on the sales turnaround since September 2020. Moreover, he reconfirmed Chanel’s commitment to keeping fashion sales offline. Rather, the company will continue to develop tools for digital sales engagement without the actual sales.
So, we’ll ask again. Do you want Chanel to sell RTW and handbags online? How important is the boutique experience for these items?