Chanel, founded by designer Coco Chanel, has pushed through some of the sharpest price increases in the luxury industry in recent years, leading some customers to complain of a disconnect between price tags and product creativity and quality.
For example, the price of a classic Chanel flap bag has more than doubled to top €10,000 (US$11,320; S$14,627) since 2019, compared with a 50 per cent rise in the average price of luxury goods, according to analysts at HSBC.
Chanel’s global chief financial officer Philippe Blondiaux pushed back against the idea that price increases had dented sales, saying that he believed consumers “totally understand that the price of the Chanel items they buy is commensurate with the quality of the raw materials”.
He added that Chanel raised prices by about 3 per cent in 2024 on its so-called fashion products, and prices would probably rise by a similar amount this year.
Chanel’s weak results underscore the challenges facing newly appointed artistic director Matthieu Blazy, formerly of Bottega Veneta, who started in April. Blazy will present his first collection in October.
Despite its struggles, Chanel invested at record levels last year. Capital expenditure, including spending on store acquisitions, increased 43 per cent to US$1.75 billion.
The company invested in silk manufacturer Montero, a metal jewellery maker and tanneries as part of a 10-year project to control more of its supply chain. The house also spent US$2.4 billion on so-called brand activities, such as fashion shows and events for clients.
Blondiaux said the investments were being made so that Blazy arrived with the “best possible conditions”.
The group is planning to make another US$1.8 billion of capital expenditure this year, as well as a “record” US$600 million spending on further integration of its supply chain, Blondiaux added.
“We are financially solid, and we have a long-term view and long-term approach to everything we do,” he said.
Few luxury groups have managed to come through the industry downturn unscathed. Sales at industry leader LVMH declined 2 per cent last year, while Kering’s sales slumped 14 per cent because of weak demand at Gucci.
However, other top-end brands in a similar category to Chanel — including Hermes and Brunello Cucinelli — both grew sales by double digit percentages last year.
Adrienne Klasa © 2025 The Financial Times.
This article originally appeared in The Financial Times.
