Yahoo Finance Chanel Praises Creative Director Virginie Viard After Revenues Rise 16% in 2023
This story was updated May 21 at 3:24 p.m. EST
PARIS — Chanel has given Virginie Viard its vote of confidence after the French luxury house again delivered record revenues in 2023.
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Chanel global chief executive officer Leena Nair and chief financial officer Philippe Blondiaux said the luxury behemoth plans to maintain both its brand strategy and creative direction unchanged, despite a slowdown in global luxury spending and mixed online reactions to its latest price increases and ready-to-wear collections.
The French fashion house reported on Tuesday that revenues totaled $19.7 billion last year, up 16 percent at comparable rates, with double-digit growth across all categories. Sales increased in all markets as tourists returned to many locations, while demand from local customers remained sustained.
“It’s a testament to the desirability of Chanel’s creations and the sustained investment we’ve made in our brand in creating the ultimate luxury experience for our clients and in supporting our people to grow and develop,” Nair said in an interview with WWD.
She underscored that Chanel has more than doubled its revenues and headcount in the last decade. In the last five years, it has doubled the size of its distribution network.
Viard, who took over as creative director following the death of her predecessor and mentor Karl Lagerfeld in 2019, has been instrumental to the brand’s success in recent years. Under her watch, Chanel’s ready-to-wear business has been multiplied by 2.5 and it grew 23 percent last year alone, Blondiaux reported.
“From a consumer perspective and a brand perspective, Virginie has been a massive contributor,” he said.
The endorsement comes after a slew of negative social media comments following Chanel’s resort show in Marseille, which targeted a younger demographic with a show held on the rooftop of the Cité Radieuse, one of the flagship midcentury housing projects of architect Le Corbusier, on a damp and blustery day.
The display came amid renewed speculation that Hedi Slimane would take over as creative director of the house — a rumor that has been doing the rounds since 2017 and has been consistently denied by Chanel.
Nair said the brand is tracking feedback on social networks, but it is only one of several key metrics. “Performance has to be viewed holistically across all measures, across all important stakeholders,” she emphasized.
“Social media is one form of feedback and we look at it and we learn from it and we always have the humility and curiosity to continuously learn and improve. But if I look at some of the other numbers, client satisfaction across all geographies has gone up. Our brand equity scores have gone up across all demographics,” she added.
Most importantly, Nair said she is meeting scores of satisfied customers on her travels worldwide. “Virginie is an inspiring woman very successfully creating for women everywhere, and the feedback of clients — the comfort, the silhouette, the fit — it’s really positive, it’s landing really well,” she said.
She also noted strong employee satisfaction rates, despite a rash of high-profile executive departures last year, including that of John Galantic, president and chief operating officer of Chanel Inc. since 2006, as well as regional leaders for Japan, Asia Pacific, and the U.K., Canada and Latin America.
The former Unilever human resources chief said it was all part of a long-term succession plan set in motion with her arrival in 2021. Nair assumed a title previously held by Chanel co-owner Alain Wertheimer, who became global executive chair of the company.
“Leadership changes and retirements are a part of the natural cycle of business. At Chanel, we are very privileged and lucky to have accomplished leaders who forged long careers,” said Nair, noting that it’s not unusual for executives to serve for several decades at the company.
“Each of them makes a significant contribution and nurtures a new generation of talent, and it’s a testament to their leadership that we have an incredible bench and these new leaders are stepping in and taking over. All these changes have been prepared, planned and done thoughtfully, as we do everything at Chanel,” she said.
“These retired leaders are loyal friends and advocates of our house,” added Nair, who was keen to counter reports of a mass exodus at the house. “I have a great team. Mood and morale at Chanel is very good. Our people pride and engagement levels are the highest [they’ve] ever been and our attrition levels are the lowest they’ve ever been.”
Blondiaux said revenues rose 14 percent in the fourth quarter of 2023 and despite a more uncertain outlook as Chinese consumers resume traveling and reduce their spending at home, Chanel is taking a long-term view and plans to spend more than ever before on stores and production facilities.
“We expect 2024 to be a year of opportunities as the environment is more challenging,” he said.
Shrugging off customer blowback, the brand will continue its policy of twice-yearly price increases to reflect inflation in raw materials and harmonize its prices between different regions, he added. Chanel last raised prices by up to 6 percent in March, driving the price of its signature Medium Classic bag above $10,000.
Operating profit was up 10.9 percent to $6.4 billion in 2023 and the brand plans to ramp up capital expenditure by at least 50 percent this year from a record $1.23 billion last year, Blondiaux said.
“We will be really on the offensive in terms of possible real estate acquisitions, but we will do them at the right time at the right price,” he said.
He declined to comment on rumors that Chanel is in talks to buy 745 Fifth Avenue, home to the Bergdorf Goodman men’s store, or 660 Madison Avenue, the site of the old Barney’s flagship.
“We are looking at many different options for New York. Again, no rush. I think we will take opportunities when they come,” Blondiaux said. “More important than the key cities that we all know for luxury, it’s probably the future cities of luxury, the future cities of influence, and that’s where we’ll set out eyes for these future real estate acquisitions.”
Chanel increased its network to 612 locations, with 47 net openings last year, of which 31 were standalone fragrance and beauty boutiques, and 16 were fashion and watches and jewelry stores, the executive said.
They included twin fashion and watches and jewelry boutiques on Milan’s Via Montenapoleone; the reopening of its flagship in Beverly Hills, and dedicated spaces for its “Chanel & moi” program, which offers after-sales services including restoring and repair.
Nair said Chanel also plans to continue investing in China. “China is a very important market for us,” she said. “We are opening more doors this year.”
Chanel’s investments in “brand-support activities” jumped 20 percent last year to $2.46 billion as the company splashed out on ads, including a new Coco Mademoiselle campaign starring U.S. actress Whitney Peak, high-profile events and client-centric activities in order to keep the brand top of mind.
It plans to increase this amount in absolute terms this year, but not in the same proportion as capital expenditure, Blondiaux said.
In addition to its ready-to-wear and haute couture shows in Paris, Chanel unveiled its cruise 2024 collection last year in Los Angeles and repeated that display in China’s tech capital of Shenzhen later in the year. In a surprising move, it showed its Métiers d’Art collection in Manchester, England, a rainy manufacturing city famous for its mills that once supplied cotton to the world.
Chanel moved its global headquarters to London from New York in 2018, and the brand is building new headquarters in Berkeley Square, set to open in 2025, housing IT, commercial, business, culture and non-fashion offices. The company hired 4,500 people last year, primarily in digital and retail, raising its global headcount to 36,500.
While Chanel made limited progress in its sustainability agenda, with a 3 percent decrease in scope 1 and 2 emissions last year, Nair said she was “proud” that the company recently became “one of the very first in the industry” to set a target to become carbon neutral by 2040.
“We are conscious we have a long way to go, but this progress gives us confidence for the future,” she said.
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