Chanel is the latest luxury company to succumb to a sector-wide downturn that has weakened several of its larger French competitors, including LVMH and Kering.
The London-headquartered tweed suit maker saw revenues and operating profits fall 4.3% and 30%, respectively, in 2024—a sharp drop for a company that had weathered the initial shock of the luxury slowdown.
Meanwhile, its capital expenditure jumped 43% to $1.8 billion as Chanel expanded its stores and targeted new markets and creative endeavors.
As Chanel navigates a tricky year, its dividend for 2024 may take a backseat.
The luxury giant hasn’t disclosed or proposed a final dividend yet, according to a filing reported by Bloomberg. But a spokesperson told Coins2Day that the board will decide any payments in the coming months.
Last year, the Wertheimer family behind Chanel received a $5.7 billion dividend, marking the largest payout in six years following strong 2023 results. Brothers Alain and Gerard, the owners of privately held Chanel, made a whopping $12.4 billion over the last three financial years thanks to a luxury spending splurge.
The Wertheimers’ family investment office, Mousse Partners, is overseen by their half-brother, Charles Heilbronn. It invests in various companies in the clothing and personal products industry and was also among the companies that took the Franco-British investment bank Rothschild private in 2023.
Chanel and the luxury market
Chanel’s earnings were dragged down by a slower appetite from high-end shoppers due to macroeconomic challenges and the company’s aggressive price increases. Bernstein SG analysts, led by Luca Solca, noted that the brand had increased prices by 59%—the highest compared to other luxury players—between 2020 and 2023.
But its price rises are slowing now, as Chanel plans to make increases in line with inflation going forward, CFO Philippe Blondiaux told Reuters.
“Chanel’s management may blame the macroeconomic context for their performance — we aren’t buying it — but their decision to hold off on price increases in 2025 and potentially even absorb U.S. Tariffs suggests they know better,” Solca wrote in the note.
Other luxury companies have also been dealing with headwinds similar to Chanel’s. LVMH, for instance, reported a 2% drop in revenues in 2024 compared to a year earlier, higher than analyst expectations but still reflecting muted demand for luxury goods.
Tariffs and their impact could result in further uncertainty for luxury labels, which might have to increase prices, move some production, or find alternate ways to cope with how the additional levies impact consumer confidence worldwide.
“As a 100-year brand, we expect ebbs and flows. Our philosophy has always been to act with a long-term view, propelled by the singularity of the Chanel brand,” CEO Leena Nair said in a statement when reporting annual results on Tuesday.
