How much money does Chanel make with the iconic quilted logo handbags and tweed jackets? Chanel, which is privately held, released its annual financial report recently for the first time in its 108-year history. The luxury French fashion house reached nearly US$10 billion in sales in 2017, putting the brand at the top among the world’s luxurious brands.
Chanel reported revenues of US$9.6 billion in 2017 with 11% organic growth, meaning the company has produced an operating profit of almost US$2.7 billion. The company has zero debt and US$1.6 billion cash.
This figure shows that Chanel surpasses many of its rival fashion houses, such as Kering’s Gucci which earned US$7.1 billion in 2017. Although LVMH does not reveal the individual earnings of each of its brands, there is speculation that its crown jewel Louis Vuitton brings in US$9 billion to US$12 billion.
The report also detailed that the fashion house spent US$1.46 billion last year on its extravagant runway shows and international custom events.
With the stack of cash on hand, now we know how Chanel can pull off all the over-the-top runway moments, such as an actual cruise ship on the runway, or sending the models straight out of an igloo with a miniature iceberg imported from Sweden.
The brand continued to raise its profile at an energetic pace, releasing 8 new fashion collections last year and investing $1.457 billion in “brand support activities,” including marketing, advertising, fashion shows and consumer events.
Chanel also revealed that sales growth was strongest in its Asia-Pacific markets, up 16.5% and accounting for 38.9% of sales in 2017. Though Europe remained its largest market with 40.6% of sales, posting a 10.2% increase. The Americas were its weakest performer in 2017, with a only 5.3% increase, accounting for 20.4% of total sales.
There is speculation that it was the embarrassment of last year’s leaked report that led the company to set the record straight this year. Philippe Blondiaux, CFO, said, “We are not for sale, and absolutely nothing will change that. We realized it was time to put the facts on the table as to exactly who we are: a $10 billion dollar company with very strong financials, plus all the means and ammunition at our disposal to remain independent,” Blondiaux told New York Times.
Blondiaux added, “We recognize that we are often a subject of much speculation and that people don’t have facts to hand, leading to the circulation of false or misleading information. It was time to let the strength of our balance sheet speak for itself.”
Chanel’s report also indicated its “Gabrielle” line of fragrance and “Gabrielle” handbag were the top sellers during the period. The company emphasised its successes in the handbags and clothing department were due to the “mastery of creativity” of Chanel’s creative director, Karl Lagerfeld.
The company also announced it plans to simplify its brand by bringing all of its major subsidiaries under one roof, which is why it is undergoing some corporate restructuring for the first time since the 1950s.