Fashion house Chanel parades its independence as profits rise
By Pascale Denis - Jun 18th, 12:49
Luxury fashion group Chanel, whose star designer Karl Lagerfeld died in February, reported higher annual sales and profits and once again reaffirmed its independence, stating it was not for sale.
The French fashion house, known for its tweed suits and quilted handbags, said its 2018 revenues rose 12.5% to $11.12bn, while net profits climbed 16.4% to $2.17bn.
Strong demand from wealthy Chinese consumers at home and overseas has fuelled higher sales and profits in the luxury industry, in spite of a trade dispute between the US and China.
Chanel enjoyed growth across all of its markets in 2018, led by Asia-Pacific where sales rose 19.9%, compared to a 7.8% rise in Europe and 7.4% in the Americas region.
The label’s move in 2018 to release its financial results for the first time since it was founded in 1910 by Coco Chanel fuelled speculation the group was preparing for a sale, despite its consistent denials.
CFO Philippe Blondiaux again said that the company was not for sale and was not planning a stock-market listing.
“We've got to live with the fact that we are one of the most desirable brands in the market. These rumours will, unfortunately, keep coming back on a regular basis,” said Blondiaux.
“Chanel needs to remain independent in order to have the freedom to make choices that go against the grain, such as no longer using exotic animal skins, or by harmonising prices,” he said.
The group is under pressure to show it can reinvent itself after Lagerfeld's death, at a time when many rivals are banking on star designers to stand out from the crowd.
In May, Chanel's new creative chief Virginie Viard delivered her first solo collection for the brand in the wake of Lagerfeld's death, and Blondiaux said Chanel saw Viard as being with Chanel for the long term.
Chanel's 2018 revenues of $11.1bn and net profits of $2.2bn compared with 2018 revenues of €46.8bn and net profits of €6.35bn at LVMH, the world's biggest luxury goods group.
Kering had 2018 revenues of €13.67bn and net profits of €3.72bn, while Hermes generated revenues of about €6bn in 2018 and net profits of €1.4bn.
Analysts have touted LVMH as a possible suitor for Chanel, but LVMH has questioned whether Chanel was too big for most rivals to absorb. LVMH executives told analysts behind closed doors in early June that they thought Chanel could be worth close to €100bn.Business Live
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