Chanel expecting massive slowdown

After reaching the milestone of 10 billion euros in turnover in 2018, Chanel came close to that of 11 billion in 2019, but the impact of the pandemic should be massive in 2020.

The luxury giant managed to raise its turnover to 11 billion euros in 2019 (+ 13% over one year), against the background of double-digit growth. However, he expects a “significant reduction” in his 2020 results due to the coronavirus pandemic. The independent group, not listed on the stock market and owned by the Wertheimer brothers, stresses that “the world has changed a lot in 2020” and that it is “not immune to the consequences of the current global crisis”. But “its solid financial base puts it in a good position,” said its chief financial officer Philippe Blondiaux, quoted in a press release.

In 2018, the Chanel house, “orphaned” since the death of its star designer Karl Lagerfeld, had further increased its sales, to 10 billion euros, thus anchoring it in the top three world luxury brands with Gucci and Louis Vuitton . This month, the designer of Chanel Virginie Viard had drawn the curtain on the excess of the Lagerfeld years with a first collection since the coronavirus crisis presented with ease, online. Called “stroll in the Mediterranean”, this cruise collection was initially to be presented on May 7 in Capri, Italy, but the parade had been canceled in the midst of an epidemic.

For the 2019 financial year, Chanel reported “good performance in all regions and product categories combined despite a difficult macroeconomic context, in particular due to the demonstrations in Hong Kong and the strikes in France”. Its net profit stood at 2.14 billion euros last year, up 11.3%, while its operating profit was up 16.6% year on year, to 3, 11 billion euros. “The temporary closure of our stores in all regions will lead to a significant reduction in turnover and profit for the whole of 2020,” said the group, without giving further
details.
He also points out that he has decided not to resort to partial unemployment measures “financed by public funds during the confinement period”, and that he has adopted measures to “preserve” his free cash flow, without go into details. “Even if short-term conditions will remain difficult, we are convinced that the passion and expertise of our teams, our innovation record and our solid financial base put us in a good position,” said the chief financial officer. “We remain confident in the long-term possibilities of strengthening our position among the most iconic and innovative brands in the world,” he adds.