Unstoppable Chanel: CEO Leena Nair on doubling revenue in a decade | Vogue Business

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Chanel plans to expand its retail footprint in 2024 following a positive year in which it bucked the wider luxury slowdown to report double-digit growth.

The French luxury house’s revenues grew by 16 per cent year-on-year to $19.7 billion in 2023 (on a comparable basis at constant currency). Sales were up 14 per cent in the fourth quarter of 2023, when many of its rivals struggled with weak demand.

Chanel is the second-largest luxury brand globally behind Louis Vuitton, whose sales surpassed €22 billion in 2023. “It’s a testament to the desire for Chanel creation and the sustained investment we have made in our clients in creating the ultimate luxury experience for our clients and in supporting our people to grow and develop,” said Chanel’s global CEO Leena Nair on a call with Vogue Business on Tuesday. “The performance in 2023 follows a period of unprecedented growth. In the last decade, we have more than doubled our revenue and more than doubled our headcount. In the last five years, we doubled the size of our distribution network.”

Nair, who joined Chanel from Unilever in January 2022, said highlights last year included the Métiers d’Art fashion show in Manchester, the launch of 31 Le Rouge — a refillable lipstick in a glass case priced at €165 — and the Tweed de Chanel high jewellery collection presented at the British Museum in London.

Chanel’s growth places it among top performers including Hermès (whose sales grew 21 per cent in 2023) and LVMH (up 13 per cent). Richemont’s sales rose 8 per cent at constant exchange rates for its fiscal year ended 31 March 2024; while Kering’s revenue decreased by 2 per cent in 2023.

By region, Chanel’s growth in 2023 was led by Asia-Pacific (up 21.6 per cent), followed by Europe (up 16.4 per cent) and the Americas (2.4 per cent). “Sales increased in all markets, with double-digit growth across all categories, and momentum carried into the final quarter,” said Philippe Blondiaux, global CFO, who was also on the call.

On trading in China — which has proved a challenging market for luxury to navigate over the past year — Blondiaux said: “There’s a kind of a redistribution of the Chinese luxury consumption. The Chinese consumers went back to their pre-Covid travelling patterns, which means that, while we’re still successful with our Chinese clientele, growth is happening outside of China to a very large extent, more in Europe and in Japan than in Mainland China.”

Blondiaux also noted the role of Chanel’s price rises. “The breakdown of the 16 per cent top-line growth we had in 2023 was 9 per cent pricing and 7 per cent volume, more or less,” he explained.

Chanel typically increases prices every March and September. “It’s simply reflecting two points, which is the inflation of the cost of our materials — which are exclusive, very scarce, [and] by definition, expensive — and as well reflecting our price-organisation policy, which is when currencies fluctuate, we readjust our prices around the world. That’s how we adjust our prices twice a year,” said Blondiaux.

“We’ve done it in March of this year. We may do it in the second part of this year depending on how these two factors — inflation and currencies — are involved. On handbags, we increased prices [in March] in a range of 0 to 6 per cent depending on the types of handbags: 6 per cent was more for the iconic range and 0 per cent in some other types of novelty.”

Amid rumours of a change in creative direction, the executives praised creative director Virginie Viard’s collections: “Virginie is a very inspiring woman. It’s absolutely fabulous to see the creation magic of creators like Virginie. I get feedback from clients all the time about the silhouette, the fit and how beautiful the clothes are landing for our clients,” Nair said. Blondiaux added: “Since Virginie took over as a designer of Chanel fashion, more or less in five years, and last year alone, the Chanel ready-to-wear business grew by 23 per cent.”

Chanel said it plans to increase its capital expenditure by 50 per cent in 2024 with more real estate and retail investments, following a record capital expenditure at over $1.2 billion in 2023 relating to the distribution network — notably the opening of the ‘twin’ boutique in Milan and the reopening of the flagship boutique in Beverly Hills. The brand’s operating profit rose by 10.9 per cent to $6.4 billion in 2023.

Nair said: “We are a $20 billion business today, and it’s because we’ve always stayed faithful to our fundamentals — building the design of a legitimate brand, which means exciting creation, exciting collections, new campaigns like the latest [Bleu de Chanel]’s Timothée Chalamet film [directed by Martin Scorsese], creating the ultimate luxury experience for our clients, which means constantly elevating our distribution network, investing in our people and keeping a long-term perspective.”

Chanel, which is owned by Alain and Gerard Wertheimer and started publishing its earnings in 2018, has been subject to several IPO rumours over the years. Nair, who sought to put the rumours “to rest” in an interview with the Financial Times last year, reiterated: “There’s no IPO on the table. We are privileged to be independent.”

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Unstoppable Chanel: CEO Leena Nair on doubling revenue in a decade | Vogue Business