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“This performance demonstrates the desirability of our creations and the strength of our brand,” says Chanel global CEO Leena Nair on a call with Vogue Business on Thursday as the French luxury house posted its highest revenue since it started reporting its numbers in 2018.
“Everything that we have done in 2022 and continue to do is with a long-term perspective in mind,” says Nair, who joined Chanel from Unilever in January 2022. “We want to ensure that our 100-year iconic house continues to stay a beacon of inspiration for the next 100 years. We want to stay ahead of the curve.”
Chanel’s revenues reached $17.2 billion in 2022, up 17 per cent versus 2021 on a comparable basis at constant currency. Operating profit rose 5.8 per cent to $5.8 billion. By region, growth was led by Europe (up 29.6 per cent), followed by Asia Pacific (up 14.3 per cent) and Americas (9.5 per cent).
Nair attributed Chanel’s performance in 2022 to a focus on the “fundamentals: our brand, our clients and our people”. Chanel has strengthened its brand equity, she said, adding: “For our clients we continue to build on the highest standards of craftsmanship and continue to take further steps to offer the ultimate luxury experience.” By comparison, LVMH’s sales grew 17 per cent in 2022, Kering’s revenue grew 9 per cent, Hermès grew 23.4 per cent, and Richemont sales rose 14 per cent (for its fiscal year ended 31 March 2023).
All categories grew by double digits. “Fashion — and in particular ready-to-wear — continues to be one of the leading product lines at Chanel, which is no surprise given the fantastic fashion shows we had, in particular in Dakar. [Creative director] Virginie [Viard]’s collections continue to be amazingly successful,” said Philippe Blondiaux, global chief financial officer, who was also on the call. “In fragrance and beauty, the return of the travel retail business helped us a lot. The travel retail business basically doubled in 2022, of course from a low base in 2021. For watches and fine jewellery, all lines performed, but I want to highlight in particular [fine jewellery collection] Coco Crush, which continues to be a fantastic success — really taking the category upwards.”
On current trading, Blondiaux said: “We’ve maintained a really good momentum in 2023, more or less at the same level of what we enjoyed in 2022. International travel is clearly more prevalent for all nationalities, and China has fully reopened its borders.”
Chanel significantly increased its prices in 2021 and 2022, notably for handbags. Blondiaux said: “If you look at topline growth of 17 per cent, it was made of 50 per cent of unit growth and 50 per cent of pricing impact, so 8.5 per cent, which as you can see is very much in line with the inflation we have observed in Western countries. In other words, in 2022, we have passed on the impact of inflation into our selling prices, nothing more, nothing less.”
In 2023, Chanel’s pricing strategy will continue to be impacted by two factors: inflation of raw materials, and the brand’s ongoing price harmonisation, which takes currency changes into account. “We never create a price difference of more than 15 to 20 per cent between one point in the world and another one,” said Blondiaux. “That may justify or not in the second half some price increases but it’s too early to say.”
Chanel famously doesn’t sell fashion online, and that is not going to change under the leadership of Nair. “We believe that for fashion, for watches and fine jewellery a physical immersive experience where the advisors can tell the story of the collection, the story of the house and build the relationship with the client is very important,” she explained. “The Rodeo Drive boutique [which opened on 5 May] is stunning, it’s 30,000 square feet, it’s large and intimate. You feel the connection to our values, to the house’s creativity.” She added that e-commerce is, nonetheless, a “very important part” of the business, representing 20 per cent of fragrance and beauty sales. “So, it is pretty significant and substantial.” Blondiaux confirmed there are no plans to shift away from its stance of not selling fashion online: “As you can see, it hasn’t impacted our performance at all, versus competition. We believe it’s the right long-term choice.”
Chanel is the second-largest luxury brand globally behind Louis Vuitton, whose sales surpassed €20 billion in 2022. While Louis Vuitton is eyeing the hospitality business, Chanel doesn’t have plans in the field. “We stay focused on our fundamentals, our heritage and reinterpreting our heritage for the modern time — how we continue to make our brand more desirable,” said Nair.
Expanding to the menswear category is not on the agenda either (Chanel is the only luxury megabrand that’s not present in the segment). “We stay true to the spirit of our founder. Gabrielle Chanel didn’t create clothes. She created a freedom of movement for women. It was about supporting women to become who they want to be,” said Nair.
Chanel announced on Tuesday that it took a minority stake in Italian wool and cashmere manufacturer Cariaggi Lanificio, alongside Brunello Cucinelli in a rare tie-up. “We have at the end of last year 47 entities that we have acquired or in which we have taken [a stake] over the last 10 years, which is a very important ecosystem and a competitive advantage versus the rest of the industry because it’s given us a unique access to high-quality materials,” said Blondiaux. “Cariaggi is a great example. We will continue to invest, increase and integrate our supply chain in order to secure access to high quality materials, which will become even more important for sustainability reasons and traceability of raw materials.”
On Thursday, Chanel also announced plans to expand its global headquarters in London. The new office located on 38 Berkeley Square will more than double its space (86,000 square feet across 11 floors). Chanel expects to transition teams to 38 Berkeley Square from its current HQ in Mayfair by the end of 2025. The company’s global headcount grew 12 per cent in 2022 to over 32,000 people and is projected to increase by another 5,000 in 2023. “It's a real statement of what a great office can look like. It shows [Chanel’s] commitment to the UK; that it’s part of our continued growth,” Nair said.
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