hnnhcronin On June 22nd, 2018, Chanel did something for the first time in the upscale company’s 108 year history: released an earnings report to the public. Since Chanel is a privately-owned and traded company, it has no responsibility to release quarterly income statements and earnings figures to its shareholders, as other publicly traded entities must do. By remaining privately owned Chanel has avoided the dependence on the ever-fluctuating investor confidence and opinions.
It is rumored that this sudden release of usually privileged financial information was an attempt made by Chanel management to dispel any rumor of a large luxury conglomerate such as LVMH acquiring Chanel. LVMH recently fully acquired all of Christian Dior earlier this year, which could have sparked the takeover rumors, especially considering Dior’s and Chanel’s very similar statuses as iconic French luxury brands. The impressive financial figures reveal that the longstanding brand definitely has the means and the will to remain independent. The question then becomes, will Chanel be able to maintain this independent success in a luxury retail market becoming monopolized by three French parent companies (Kering, LVMH, Richemont).
Chanel generated $9.6 billion in profits during fiscal 2017–a figure up 11% since 2016. This figure is larger than the $9.3 billion in sales that Louis Vuitton, widely thought of as the largest global luxury brand, earned for 2017. The report also contained information relating to the bestselling items: the new Gabrielle fragrance and the Gabrielle purse, both named after founder Gabrielle “Coco” Chanel. The Gabrielle bag starts at $3,600 for the small backpack and sells for as much as $5,800 for certain materials (python, alligator, and calfskin) of the Hobo bag. The Gabrielle collection includes small backpacks, mini hobo bags, and Hobo bags, all in different materials and colors. The company attributes the success of both the Gabrielle fragrance and handbag collection to the rebellious yet classic spirit of the brand’s namesake.
Despite the strong desire to remain independent, Chanel is taking some business cues from the big three conglomerates as it engages in some corporate restructuring to unify all of the different Chanel subsidiaries back into the control of the main brand. Chanel announced that the more simplified brand will be called Chanel Limited and should improve the organization and management of the company as a whole, opening the doorway for more communication and uniformity among the different entities comprising Chanel.
Like Hermes, Chanel has succeeded in remaining its own company and keeping its own (and Gabrielle Chanel’s independent-minded) interests at heart rather than becoming a part of LVMH, whose primary focus is Louis Vuitton, or Kering, whose main focus lies with Gucci.
