THE WHAT Chanel has reported revenue of US$10.1 billion, down 18 percent year on year compared to 2019, citing a ‘highly disrupted environment’ that led to the closure of its boutique and manufacture network, and the suspension of international travel.
THE DETAILS Operating profit was reported at US$2,049 million, down 41.4 percent YOY, and a free cash flow of US$679 million, down 70 percent compared to 2019.
However, the luxury fashion house unveiled a record level of capital expenditure of $1.120 million, representing 11.1 percent of sales, which it stated ‘demonstrated Chanel’s commitment to long-term value creation and confidence in the company’s financial strength.”
The company also invested US$1,360 million in brand support activities.
Chanel said there was an improvement in sales trends in the final quarter of the year, due to its creative efforts and support of local consumers.
A strong growth in fragrance & beauty online sales is said to have partially offset the impact of the decline in travel retail. Skincare was also noted to have outperformed.
THE WHY Chanel stated that the all-time high of capital expenditures in 2020 demonstrated the financial strength of the house, as well as its confidence in the future.
It will continue to invest heavily in its retail distribution.
Philippe Blondiaux, Global Chief Financial Officer, said, “Chanel’s focus on creativity and innovation, unique savoir-faire and the agility of our teams and our organisation, helped to limit the impact of the crisis. At the same time, Chanel has continued to prioritise investment to support the long-term health of the brand, with record levels of capital expenditure through the year.”