Chanel comes out triumphant from China when rivals struggle

Chanel seems to not feel its luxury peers ‘pain due to the economic downturn in Asia. The French maison has enjoyed spectacular growth in fiscal year 2014 in terms of turnover, operating profit and operating margin.

Swiss publication ‘Bilan’ has had access to the 2014 financial statements of Chanel, audited by Deloitte. Figures show how Chanel, a privately held company, in hands of the Wertheimer brothers, achieved a turnover of 7.51 billion dollars last year, up 9.4 percent over 2013.

Operating profit is poised to exceed the 2 billion dollars milestone for the first time, resulting in an operating margin of 27.8 percent. The increase in net income also came in as a spectacular advance: up 38 percent to 1.44 billion dollars.

Chanel expects “continued growth for the future”

The 77-page audited report foresees this year "to be positive, the company expects continued growth for the future".

Net profit for the five publicly traded companies that Bloomberg uses to value Chanel — Prada, Kering, LVMH, L’Oreal and Estee Lauder — was down a collective 6 percent in their 2014 fiscal years.

“Chanel is having extraordinary success in China and with the Chinese, hence their recent phenomenal growth,” said in this regard Luca Solca, head of luxury goods research at Exane BNP Paribas in London.

Chanel´s early adoption of harmonised prices worldwide pays off

It is worth of recalling that earlier this year, Chanel led the way towards a global price harmonisation, to avoid large fluctuations of prices of its products in different countries badly affect the company´s profitability and brand reputation.

Thus, aimed to tackle currency swings and other cross-market instances, Chanel decided that the difference in price for the same item across the 190 countries it operates should not be greater than 10 percent.

Prior to start applying this policy, the French luxury fashion house raised prices by 20 percent in Europe on its three top selling bags: the "Boy", the "11.12" and "2.55".

Chanel´s owners get richer on the company´s steady growth

Chanel´s resilience to global economic downturns has paid off for the company´s sole owners, brothers Alain and Gerard Wertheimer.

According to data compiled by Bloomberg, the billionaire siblings each have 11.8 billion dollars fortunes and are the sixth and seventh-richest people in France. Almost all of their fortunes stem from their stake in Chanel, which reported 2014 revenue of 7.5 billion dollars and net income of 1.4 billion dollars.

The Wertheimers’ fortunes have risen 13 percent since January 2014, ranking then among the world’s 100 richest people.

 

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