Chanel dispels rumors of sale after announcing a strong financial year
Jun 17, 2019
Chanel surpassed 11.1 million dollars in sales for the 2018 financial year. The privately-owned luxury company announced in a statement that it feels these results demonstrate its financial strength and its commitment to sustainable, long-term value creation.
The company had an operating profit of 2,998 million dollars in 2018, which is up 8 percent from the year before. There was a free cash flow of 1,214 million dollars in after significantly increased capital expenditures, which increased to more than 1 billion dollars.
“Chanel has had another strong year," said chief global financial officer Philippe Blondiaux in a statement. "Our successful collections and new product launches contributed to the growth of our business across all product lines.
"2018 was also a year of significant investment by the group as part of a strategic multi-year program to secure our supply chains, accelerate our digital transformation, and strengthen our social and environmental commitments. These investments and the commitment of our talented teams will secure the brand’s iconic status and its long-term development."
Chanel reported investment of 1,653 million dollars in brand support activities to deliver the strategy focused on creation and innovation. It has been making supply chain investments such as the acquisition of 100 percent of European leather supplier Colomer Leather Group. It also took an equity stake in Swiss company Kenissi to strengthen its position within the fine watch industry.
Chanel speaks out against rumors of sale and IPO
Since the death of Chanel's long-time creative director Karl Lagerfeld in February, analysts have speculated whether the brand was looking to change ownership. Chanel remains one of the only privately-owned luxury fashion brands in an industry where most of its competitors are owned by conglomerates LVMH or Kering.
While Bloomberg estimated that Chanel is worth close to 113 billion dollars and could be out of reach for most luxury conglomerates, analysts have concurred that IPO would be a feasible strategy for the brand.
However, along with the announcement of its 2018 financial results, Chanel has again addressed rumors and assures that it intends to operate as a private company.
“Chanel is not for sale, Chanel is not preparing for an IPO, I just want to reconfirm that for the hundredth time this year,” Blondiaux told Business of Fashion. “The numbers we’ve shared show that our strategy is exactly the opposite of a company preparing for a sale or an IPO. We’ve increased our level of investments... to prepare for the long term. We’ve increased our headcount ahead of the curve at the risk of slightly eroding our short-term margins, which we don’t care so much about, to prepare for the long term. That remains our strategy.”
Photo: Chanel AW19, courtesy of Chanel