CHANEL: CORONAVIRUS WILL AFFECT LUXURY SEGMENT FOR AT LEAST NEXT TWO YEARS

Despite predicting a profitable year overall.

By Balthazar Malevolent

CHANEL: CORONAVIRUS WILL AFFECT LUXURY SEGMENT FOR AT LEAST NEXT TWO YEARS

Despite the coronavirus pandemic little by little getting under control, the French luxury goods company Chanel predicts that the lingering economic effects will affect the luxury sector for at least the next two years.

“We expect that the global climate will continue to affect the luxury segment negatively for at least the next 24 months,” says Chanel's CFO Philippe Blondiaux in an interview with Reuters. Despite these predictions, the group has seen a growth of 13 percent since 2019 and expects to be profitable at the end of the year. Previously having to shut down many of its retail locations, nearly 85 percent of the group's stores have now reopened, with a massive sales bounce in China going over 100 percent for a few weeks. According to the CFO, activity is beginning to resume in Paris, Milan and Berlin too. "This incredibly strong performance with the local clientele will not be enough to compensate for the absence of international business, the absence of international visitors and the fact that our duty-free business is still largely closed," said Blondiaux. Chanel has agreed to reduce promotional expenses and advertisements, slash inventory, as well as reworking fashion shows to prepare for the bleak future.

Chanel boutique.

Looking at the bigger picture, consulting firm Bain & Company says the $310-billion luxury goods market can see revenues fall by up to 35 percent this year.

Chanel S.A. It is a private French company owned by Alain Wertheimer and Gérard Wertheimer, grandsons of Pierre Wertheimer, who was the couturière Coco Chanel's early business partner. Chanel is a luxury company focusing on high fashion and ready-made clothes, luxury products, and accessories. From her time as a chanteuse, Gabrielle Chanel earned the nickname Coco in her youth. As a fashion designer, CC catered to women's taste for elegance in dress, with shirts and suits, trousers and skirts, and jewelry of simple design, that replaced the opulent, over-designed, and constrictive clothes and accessories of the 19th-century fashion. Fashion models, actresses, and icons have personified the Chanel product brands, including Catherine Deneuve, Carole Bouquet, Nicole Kidman, Anna Mouglalis, Jackie Kennedy, Audrey Tautou, Kristen Stewart, Keira Knightley, Jennie Kim, Cara Delevingne, Marilyn Monroe and others.

Looking forward to hearing from big fashion houses such as Alexander Wang or Mugler about their future plans and prognoses.

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