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Investing.com -- The private luxury goods company, Chanel, has recently released details on its fiscal year 2024 (FY24) financial performance. The company reported a decline in comparable growth by 4.3% and a decrease in operating margins by 850 basis points to 24.0%.
Chanel’s FY24 performance lags behind its closest comparable, LVMH (EPA:LVMH)’s Fashion & Leather Goods (F&LG) division. Chanel implemented a price increase of 3% in 2024, which indicates a volume fall by 7%. In contrast, LVMH’s F&LG division reported a lesser decline in organic growth of 1% in FY24, with its EBIT margins falling by 280 basis points to 37.1%.
The overall luxury industry experienced a slight organic growth of 0.4% and saw EBIT margins decline by 360 basis points to 22.8% in FY24. Chanel’s performance underscores the value-for-money concerns that are currently impacting certain soft luxury brands.
During the pandemic, Chanel was one of the brands that aggressively increased its prices. This strategy led to rising value-for-money concerns once the post-pandemic excitement began to diminish.
While Chanel’s management may attribute their performance to the macroeconomic context, their decision to pause price increases in 2025 and potentially absorb US tariffs indicates that they are aware of the issues at hand.
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