Chanel profit tumbles as global sales slow down

French luxury group Chanel will maintain its elevated capital spending this year despite a 4.3 per cent decline in sales last year and growing market volatility, particularly in Asia and the US.

The company said it would sustain its US$1.8 billion level of capital investment – up 43 per cent from the year prior – to support global expansion, including 48 new store openings this year.

Roughly half of those will be in China and the US, with additional locations planned for India, Mexico, and Canada. Only six of the new stores will be dedicated to fashion, with the rest focused on beauty, jewellery, and other categories.

For the fiscal year ending December, Chanel reported revenue of US$18.7 billion and a 30 per cent decline in operating profit. Performance in Asia-Pacific was particularly affected, with sales falling 9.3 per cent. North and South America declined 4.3 per cent, while Europe saw a modest 1.2 per cent increase.

The company reported a 28.2 per cent decline in net profit to $3.4 billion last year, attributing the fall to ‘challenging’ conditions in some markets.

Group CFO Philippe Blondiaux acknowledged uncertainty in the outlook, particularly related to China and US tariff policies.

“We continue to navigate in very uncertain times,” he told Reuters. While he cited “positive signs of stabilisation” in China and Hong Kong, he added it was still “too early to say” whether the region had turned a corner. He also described the ongoing tariff negotiations in the US as “extremely volatile”.

Chanel raised prices by about 3 per cent last year to offset inflation, and Blondiaux said further adjustments may be necessary, particularly in jewellery, where gold prices continue to rise.

“Macroeconomic and geopolitical volatility are unquestionably challenging for business, and we’ve seen these conditions have an impact on sales in some markets,” Chanel’s global CEO Leena Nair told Vogue Business. “But we are continuing to invest in the long term.”

Last year, Chanel named Matthieu Blazy as creative director. Despite speculation about a menswear expansion, it said there are no plans to pursue the category.

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