Luxury has been hit hard by the new coronavirus crisis, as have many industries. Chanel CFO Philippe Blondiaux said the sector will take at least two years to fully recover.
The coronavirus crisis will weigh on the luxury sector for at least two years, estimated Thursday the financial director of Chanel, whose turnover and profits will be, according to him, significantly affected in 2020.
« We expect the external environment to continue to weigh negatively on the luxury sector over the next 18 to 24 months,» Philippe Blondiaux told Reuters, judging that a solid recovery in countries where the group’s boutiques have reopened would not make up for the loss of revenue due to the suspension of international flights.
Chanel reported Thursday that its 2019 sales will grow by 13% on a comparable basis to $12.3 billion (10.96 billion euros), and operating income will increase by 16.6%.
A profit still expected for this year
Since the lifting of containment measures, 85% of the group’s stores have reopened worldwide. According to Philippe Blondiaux, sales have seen triple-digit growth in China and double-digit growth in Paris, Milan and Berlin.
« This very good performance with local customers will be insufficient to compensate for the absence of international trade, foreign visitors, and the fact that our duty-free sales […] are still largely non-existent,» he added, without making any precise forecasts.
Chanel’s CFO did not give a precise assessment of the expected impact of the crisis on the group’s results and sales, although the group still expects to make a profit this year. According to the consulting firm Bain, the luxury goods sector, whose turnover is estimated at 310 billion dollars, could see a drop this year of up to 35% of its sales.
To partially mitigate the impact of the crisis, Chanel has reduced its advertising spending by more than a quarter, adjusted its production and cancelled all events, including the fashion shows scheduled for this year, said Philippe Blondiaux. Founded in 1910 by Coco Chanel, the group, world-renowned for its quilted bags and its No. 5 fragrance, has only been publishing its results for two years. It is one of the world’s leading luxury brands alongside Louis Vuitton, owned by LVMH, and Gucci, owned by Kering.