Chanel Revenues Gained 17% in 2022
The French fashion house cited strength across all product lines as profit after taxes rose 14.2 percent to $4.6 billion.
BY MILES SOCHA / MAY 25, 2023, 8:00AM
PARIS — Chanel is closing on luxury’s ultra-exclusive $20 billion threshold, reporting revenues gained 17 percent last year to $17.22 billion, while operating profits rose 5.8 percent to $5.78 billion. The French fashion house trumpeted double-digit growth across all product lines, and noted retail teams “nurtured local
clienteles” during pandemic restrictions, alluding to lockdowns in China that dented luxury growth last year.
Revenues in Asia-Pacific gained 14.3 percent to $8.65 billion on a comparable basis, stripping out the impact of currency fluctuations and changes in company structure. Revenues improved 29.6 percent in Europe to $4.72 billion and 9.5 percent in the Americas to $3.86 billion.
In a statement, Leena Nair,
Chanel’s global chief executive officer, said the strong financials “reflect the strength of our brand, our client relationships, and the freedom of creation that defines everything we do.”
“Our fundamental belief is that when we focus on building our brand’s strength, engaging with our clients, taking care of our people and integrating a long-term perspective in everything we do, our financial performance will follow,” she added.
Investments in “brand-support activities” shot up 14.3 percent last year to $2.05 billion, underscoring how luxury’s biggest players are gaining mind share and gobbling up market share via heavy investments in advertising, splashy global events and client-centric activities.
In addition to its lavish ready-to-wear and haute couture displays in Paris, Chanel
unveiled its cruise 2023 collection last year in Monte-Carlo, and repeated that show in Miami later in the year. It also made history as the first European luxury brand
to stage a fashion show in sub-Saharan Africa, unveiling its Métiers d’Art collection in the Senegalese capital of Dakar.
Capital expenditures last year totaled $668 million, representing 3.9 percent of sales, with the lion’s share of the money poured into Chanel’s global retail network. Key openings in 2022 included a revamped and enlarged watches and fine jewelry boutique at 18 Place Vendôme in Paris, and a new Ginza Namiki flagship in Tokyo. Expanding Chanel’s network of standalone fragrance and beauty boutiques was another priority.
“Investment in digital initiatives and information technology systems also remained a key area of focus in supporting the customer experience and business operations, and e-commerce capabilities continued to expand worldwide,” it added.
Chanel grew its headcount by 12 percent last year and counted 32,116 employees worldwide at the end of 2022. Hirings were focused particularly on digital, IT and sustainability roles, with the number of the latter experts vaulting 60 percent.
Nair and Philippe Blondiaux, group chief financial officer, expressed a positive outlook despite broad macroeconomic challenges and market uncertainties.
“We remain confident in our ability to deliver sustainable and healthy growth, committed to our people, our clients and our brand,” Blondiaux said in a statement Thursday.
In a telephone interview, Blondiaux said 2022’s momentum has carried over into 2023 and it’s tracking double-digit gains in Mainland China. He acknowledged business has “softened” in the U.S. since November and it continues to do so. “We are still growing single digits in the U.S.,” he noted.
“As we look forward, our priorities are clear, focused on our belief in the transformative role of creation, our desire to have a positive impact in the world, and to always stay ahead of the curve,” Nair added, quoting house founder Gabrielle Chanel, who once declared “être de ce qui va arriver” (to be part of what happens next, in English).
Separately on Thursday, Chanel announced plans to expand its global headquarters in London and move its teams to a new building at 38 Berkeley Square by the end of 2025.
A rendering of Chanel’s future global headquarters in London’s Berkeley Square.
Design by architects Piercy and Co. and to be constructed “to the highest standards of sustainability and accessibility,” the new building is more than double the size of the current Chanel headquarters in the Time & Life Building at 1 Bruton Street.
Chanel moved its global headquarters to London from New York in 2018.
Its tenancy agreement at the new building is for 20 years, with an option to extend to 30 years, demonstrating “Chanel’s intention to continue to grow its global community in one of the most creative, international and diverse cities in the world,” the company said.
Chanel noted it plans to hire about 5,000 more employees in 2023.
The company does not break down sales by product category. In fashion, it flagged “exceptional growth across all categories, particularly in leather goods and shoes.”
Chanel described “sustained momentum” in watches and fine jewerly, driven in particular by Coco Crush collections and the relaunch of the Première watch.
“Fragrance and beauty benefited from the steady return of travel retail, as well as sustained demand from local clientele,” the company said. Key launches last year include the eco range No. 1 de Chanel, and the makeup products Rouge Allure L’Extrait and Les 4 Ombres Tweed makeup.
Chanel ended 2022 with a net cash position of $2.37 billion, up 322.3 percent versus the prior year, while free cash flow decreased 22.2 percent to $3.53 billion.
Profit after taxes amounted to $4.6 billion euros, up 14.2 percent versus the prior year.
Chanel’s 2022 growth represents a slowdown from 2021, when its revenues shot up 22.9 percent at comparable rates to $15.6 billion.
The group’s numbers also came in below luxury conglomerate LVMH Moët Hennessy Louis Vuitton, which saw revenues jump 23 percent in 2022 as a whole, while its flagship brand Louis Vuitton shot well past 20 billion euros in revenues, maintaining its stature as the industry’s largest player in fashion and leather goods.
Overall sales at Hermès International were also up by 23 percent in comparable terms in 2022.
Meanwhile Kering, saddled by problems at Gucci and Balenciaga, saw full-year 2022 revenues rise only 9 percent.
Alongside its financial results, Chanel highlighted efforts to respect the environment and support its employees, a reflection of the expertise of Nair, who joined the French fashion and beauty house in January 2022 from Unilever, where she was chief human resources officer.
“With our expanding international footprint, we are determined to contribute positively to the environment and our communities,” Nair said, noting the company would significantly increase funding of Fondation Chanel, a philanthropic organization focused on gender equality. In 2022, funding was raised to $100 million annually.
Blondiaux noted the company last year took steps “to support our people through inflationary pressures and continued periods of uncertainty, with tailored training, commitment to pay equity and access to flexible working.”
Employees received “an exceptional mid-year salary increase,” the company noted.
