French luxury group Chanel expects to increase sales by double digits this year compared with their 2019, pre-pandemic levels, the group's chief financial officer said on Tuesday after the coronavirus crisis hit revenues in 2020.
Privately-owned Chanel, known for its tweed suits, quilted handbags and No. 5 perfume, is one of the biggest brands in the 280-billion euros ($340 billion) global luxury industry alongside LVMH's (LVMH.PA) Louis Vuitton.
The group's sales last year totaled $10.1 billion, an 18% decline at constant exchange rates that is steeper than that seen at some rivals. Revenues at LVMH fell by 16% in 2020, while those at Hermes (HRMS.PA) were down by just 6%, according to Reuters.
"As we speak, we are growing double digit versus 2019 so far this year and we see no reason for this trend to change," Chanel's finance chief Philippe Blondiaux told Reuters, adding to signs that big luxury groups are emerging from the crisis more quickly than expected initially.
He said that China and the United States in particular were driving the rebound, which he saw as more than a temporary surge sparked by shopping deprivation.
"We're beyond what some have called revenge buying, we believe it's a deep and lasting momentum, which may not be true for all the players in the luxury industry but it's true for the big brands which continued to invest, as we did."
Chanel spent a hefty $1.36 billion in 2020 to support its brands. Blondiaux said the strong recovery seen since the autumn of 2020 had been broad-based, encompassing Chanel's fashion, fine jewellery, watches and skincare products, though revenues for its sizeable fragrances and make-up business, which is heavily exposed to duty free sales, were flat compared with 2019.
Even when it was forced to shut stores due to coronavirus lockdowns, Chanel had stuck to its long-held strategy of not selling fashion, watches and fine jewellery online.
Instead, like many rivals it turned its sales assistants into personal shoppers showing collections to clients, organizing fitting sessions and special deliveries at home, and keeping in touch through a new app, Blondiaux said.
The fashion house, which does however sell cosmetics and perfumes online, said e-commerce sales in these areas had grown 113% in 2020 and were up 57% so far this year.
Chanel prides itself on having a strong local customer base and Blondiaux said its rule of thumb of doing 80% of its business locally rather than relying heavily on tourist shopping was now true in China and many Asian countries.
"We don't see this changing in a dramatic way in 2022, the repatriation (of spending) that we have seen in 2020/2021 is here to stay, at least for an extended period of time," he said.
The group, founded in 1910 by Coco Chanel, has not yet increased prices this year, but this may happen in the second half -- in line with its policy of reviewing prices worldwide twice a year, he said.
The health crisis has further exposed the divide between healthier and weaker luxury brands and may accelerate consolidation in the sector, Blondiaux said -- adding however that the group owned by billionaire brothers Alain and Gerard Wertheimer did not have any M&A ambitions.
"Chanel will not participate in this consolidation either as a target or as an acquirer. We will be out of it," he said.