Chanel Profits Drop 30% in 2024 as China Luxury Demand Slows

Chanel experienced a significant decline in 2024, with operating profits falling nearly 30% to $4.5 billion and revenues dropping 4.3% to $18.7 billion, marking the first such decline since the pandemic. The downturn was driven largely by weakness in key markets, particularly a 7.1% sales drop in Asia, including China, which accounts for about half of Chanel's revenue, alongside decreases in the Americas and modest gains in Europe. Despite the financial setbacks, Chanel defended its aggressive price increases, such as the doubling of the classic flap bag price since 2019, citing quality of raw materials as justification. CEO Leena Nair highlighted economic and geopolitical uncertainties impacting sales and emphasized a long-term strategic approach, including a 43% increase in capital expenditure to $1.75 billion focusing on store acquisitions and supply chain investments. The company also boosted marketing and brand activities spending to support new artistic director Matthieu Blazy and announced a hiring freeze to maintain stable headcount, with minor workforce adjustments in regions facing growth challenges. Chanel remains cautious about the outlook for 2025 but is committed to navigating the luxury market's current volatility through sustained investment and adaptation.