Chanel to expand in China despite industry trends
Chanel plans to expand its presence in mainland China despite a shift in Chinese shoppers' spending to other markets. CEO Leena Nair highlighted the importance of scaling, noting young Chinese shoppers' interest in luxury goods as investments.
Chanel's CFO, Philippe Blondiaux, pointed out the brand's underrepresentation in China, with only 18 boutiques compared to competitors' 40-50 stores. The company intends to open a private salon and repair centre in Shanghai and increase capital spending to $1.8 billion this year from $1.2 billion in 2023.
In 2023, Chanel reported a 16% revenue increase to $19.7 billion, driven by double-digit growth in Asia and Europe, which offset a U.S. slowdown. The brand also expanded its workforce by 14%. Despite mixed sales results in China, Chanel remains optimistic, considering potential price increases later this year to address rising costs and exchange rate differences.
Chanel's sales growth was in the double digits across all categories, including fashion, handbags, and beauty. Europe and Asia saw high teens and low 20s growth rates, respectively, countering industry concerns amid Asia's slowing economy, while the Americas saw softer growth at 2.4%.
As the luxury industry's growth slows from recent highs, Chanel, alongside top-tier players like Hermès and LVMH, emerges as one of the most resilient brands, benefiting from its high-end positioning and wealthy client base.
Image - The Peninsula Arcade
