Chanel sheds 200 jobs as sales of luxury items decline
Lizzy Davies in Paris
The Guardian, Monday 29 December 2008
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A Chanel jacket at Steinberg and Tolkien vintage clothes shop in London. Photograph: Graham Turner/Guardian
Chanel is to cut 200 jobs as fears grow that the supposedly recession proof luxury market is falling victim to the global credit crisis. Citing a steep decline in this year's sales, the largest French union, the CGT, said the losses at the French fashion label would concern all staff on fixed term and temporary contracts and come into effect on Wednesday. Sixteen posts would be cut from the brand's boutique on rue Cambon in the heart of Paris's fashion district, it added in a statement at the weekend.
The job losses, described by some commentators as the label's worst crisis since founder Coco Chanel fired all her staff at the outbreak of war in 1939, represent almost 10% of the company's production workforce. The redundancies come after a difficult year for the fashion, perfume, cosmetics and accessories businesses where growth has almost ground to a halt.
Last week the company announced it was bringing to a premature end a highly publicised global art installation for fears its quirky marketing operation had become a luxury the brand could not afford. Designed by British architect Zaha Hadid, the travelling show - inspired by Chanel's quilted handbags - was due to come to London in 2009.
"In the current context we ... prefer to refocus on our strategic investments in terms of development," said a company spokeswoman, admitting it made little sense in the middle of a global downturn to pursue a project "where we weren't selling anything".
The troubles at rue Cambon will be taken as a warning signal for the rest of the luxury goods industry, traditionally thought to remain resilient in a tough economic climate. After several years of rapid growth, the sector's coveted niche is showing signs of weakness and analysts at JP Morgan have predicted the luxury market will see sales fall by 4% in 2009.
Bulgari, the Italian jeweller, has forecast a lower profit for the year and has said it will not give an outlook for the new year after the global crisis knocked 44% off its third-quarter net profit.
Prada shocked fashionistas in Milan over Christmas by reportedly putting up sales posters advertising price cuts in their boutiques' windows. Even world leader LVMH, the French group behind Vuitton and Givenchy, has had a tough year, postponing a plan to open a leading Vuitton store in Tokyo.
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