Chanel: the group hopes for a strong recovery in its business in 2021

  •   06/07/2021 - 13h42
  •   DEHOUI Lionel

Groups such as H&M, Fraport, Tesla, Électricité de France (EDF), Nyxoah and Moulinvest have been in the news recently. Some publish financial results for a specific period. Others are signing partnership agreements, acquisitions, disposals, etc. Several other companies are more focused on the economic recovery, such as Chanel, which is hoping for a strong increase in activity throughout 2021.

Chanel: the group hopes for a strong recovery in its business in 2021

Chanel's business recovery presages strong growth

Chanel is forecasting double-digit growth in sales for the current year as a whole. Chanel's sales were heavily affected by the health crisis at the end of fiscal 2020. Its sales generated $10.1 billion (€8.3 billion) in the entire 12 months of this fiscal year.

The company is indeed well known for marketing tweed jackets or quilted handbags. In fact, Chanel recorded an 18% annual decline in sales at constant exchange rates. This mixed performance is nevertheless better than that of some of its competitors in the market.

For example, the current world leader in luxury goods (LVMH) reported a 16% decline in annual sales in 2020. At the same time, the Hermès group's sales were down (-6%).

 

Strong (double-digit) growth since the beginning of 2021

Since the beginning of the 2021 financial year, the Chanel group has returned to double-digit growth in its sales compared to 2019. A trend within the markets that will certainly continue throughout the year and for a long time. Deep and sustainable, this trend may seem unreal to the college of luxury industry players. However, this significant growth dynamic is very realistic for the major brands that have continually invested, such as Chanel.

For example, the latter has invested a colossal sum of 1.36 billion dollars in 2020 to support its own activities. Since last autumn, all the different divisions of Chanel (one of the biggest players in the field) are recovering strongly.

 

General growth in 2020, but one branch remains stable

From skincare products to fashion and high jewellery, the dynamic of strong recovery is identical and remarkable. The exception remains the main branch of perfumes and make-up, whose turnover has been stable compared to 2019. It should be noted that the turnover of this branch is exclusively linked to sales of "durty-free" tax-free products.

In addition, the Chanel house continued with the implementation of its long-standing strategy, despite the closure measures imposed on stores. This program is based on a ban on online sales of fashion, jewelry and watches.

However, online sales of the company's fragrances and cosmetics grew 113% in 2020. They are already showing a 57% growth since the beginning of the year. In China, as in many other Asian countries, the group's policy based on achieving 80% of its business is now a reality.