Price increases and stock shortages appear to be a good thing for exclusive luxury brands. Or so it seems after Chanel‘s strong annual figures: last year, the fashion house achieved a 50% increase in turnover and almost a three-fold increase in profit.
Americans flock to luxury
The more restrictions, the more luxury consumers like it. So it seems, as Chanel had an excellent year in 2021: turnover rose by no less than 50% to 15.6 billion dollars (14.6 billion euros), while the operating result rose by over 170% to 5.5 billion dollars (5.2 billion euros). Despite the still raging Covid crisis, sales were also up 27% compared to 2019. Even profits clocked 57.5% higher than before the pandemic.
European sales have not yet fully recovered from Covid, but in Asia-Pacific, Chanel was already selling 50% more than in 2019. But as other brands also mentioned earlier, the American consumer in particular is back. Sales in the Americas were up 52% last year compared to pre-Covid levels.
Just two bags a year
Yet, Chanel is particularly hard on customers. During the pandemic, the brand raised its prices numerous times, and in July, too, new price increases are on the cards. The luxury house has even set limits on its iconic ‘classic flap’ handbag: in the US, for example, consumers are only allowed to buy two pieces a year of the bag, which can cost up to 10,000 dollars.
At releases in South Korea, people are queuing up before dawn to get their hands on one. Resellers pay people hundreds of dollars to stand in line for them, according to MarketScreener. Even though the designer clutch now costs twice as much as it did in 2019.
Similar restrictions could be introduced in more countries, says CEO Philippe Blondiaux, in order to combat large-scale online reselling. Supposedly for that reason, Chanel also wants to harmonise prices around the world. Except for Russia: as a sanction, Russians are only allowed to buy for 300 euros from the brand, even abroad, to much protest from some Russian fashionistas.
