Chanel stays on growth path despite weak results in China and US

French luxury group Chanel will continue to invest heavily this year, drawing on its deep pockets as other sector players pull back, with plans for new stores in China and the United States, despite volatility in both markets, it said on Tuesday.

“We continue to navigate in very uncertain times,” group finance chief Philippe Blondiaux told Reuters. He flagged “positive signs of stabilisation” in China and Hong Kong, but said it was still “too early to say” the region had turned a corner, while ongoing talks on tariffs were causing “a lot of uncertainty.”

Despite a 4.3% drop in sales last year, the French label, known for its double C logo, quilted leather handbags and No. 5 perfume, said it planned to stick to last year’s capital spending level of $1.8 billion, which was a 43% increase from the previous year. It will also invest $600 million in supply chains as it internalizes production, including buying shares in a silk supplier in France and a jewelry maker in Italy.

Chanel posted $18.7 billion in sales for the year ending Dec. 31, with results weighed down by a slump in China. Operating profit dropped by 30%. The brand plans to open 48 new stores in 2024, nearly half of them in the United States and China, with additional locations in Mexico, India and Canada. Only six of the new outlets will focus on fashion.

“Macroeconomic and geopolitical volatility are unquestionably challenging for business, and we’ve seen these conditions impact sales in some markets,” said global CEO Leena Nair.

Chanel, which increased prices by around 3% last year to keep up with inflation, may raise them further this year, in line with inflation, Blondiaux said. He added that higher gold prices may lead to higher price increases for the jewelry range.

Nair said that new creative director Matthieu Blazy, who was named in December to replace Virginie Viard, would not introduce menswear—a topic of recurrent speculation.

Blazy’s appointment comes amid a broad designer reshuffle across the industry, with new names at top brands including Gucci, Dior, Balenciaga and Valentino, as executives seek to reignite sales growth.

Chanel is owned by French billionaire brothers Alain Wertheimer and Gérard Wertheimer.

Last year, sales at LVMH, the world’s biggest luxury group, rose 1%, with U.S. and European markets helping to offset a slump in Asia. At the same time, Hermès has outpaced rivals and posted nearly 15% growth, with growth in all regions, including Asia.

Luxury groups had hoped the U.S. would lift the sector out of its slump in 2025. However, ongoing tariff uncertainty has weakened those expectations. Consulting firm Bain recently revised its luxury market forecast to a likely decline of 2% to 5% this year.