Chanel, the luxury fashion brand known for its timeless designs and iconic products, has reported a dip in sales growth in the United States over the past six months. This indicates a slowdown in post-pandemic spending in the country. Philippe Blondiaux, the Chief Financial Officer of Chanel, noted that the trend in the U.S. market has softened since November. While specific figures were not disclosed, Blondiaux mentioned that the U.S. market experienced double-digit growth in 2022.

However, Chanel is looking to offset this temporary decline in the U.S. by focusing on sales with Chinese shoppers. The brand has seen an increase in sales both in mainland China and as Chinese travelers resume their journeys. This is expected to compensate for the softness in the U.S. market. Asia as a whole accounts for 50% of Chanel’s sales.

In comparison to its rivals, LVMH and Kering, the proportions of U.S. sales for Chanel were not specified. LVMH and Kering reported that the U.S. market accounted for 27% and 18% of their revenues in 2022, respectively. The performance of luxury stocks in Europe has been affected in recent weeks due to concerns about the U.S. market. Younger and aspirational shoppers in the U.S. have been delaying luxury purchases due to rising living costs and economic uncertainty. Analysts at HSBC have identified the sluggishness in the U.S. market as a key focus point for the second quarter.

Despite the challenges posed by the U.S. market, Chanel remains committed to investing in the country. The brand recently opened a new store on Rodeo Drive in Los Angeles and sponsored the Karl Lagerfeld exhibit at the Metropolitan Museum in New York. Chanel plans to increase its workforce by approximately 16% this year, following a 12% increase in 2022, with a focus on expanding its retail networks. Additionally, the brand is expanding its global headquarters in London, where it moved from New York in 2018.

Amid the economic turbulence, luxury brands have been targeting their wealthiest clients and prioritizing quality over quantity. Chanel, which raised its prices significantly during the pandemic, is also placing emphasis on attracting younger consumers. The brand is investing in its stores and digital tools, such as virtual jewelry try-on experiences, to engage with this demographic. CEO Leena Nair, who joined Chanel in January 2022, has noted an increasing number of younger consumers who value buying fewer but higher-quality items.

Chanel, owned by French billionaires Alain Wertheimer and Gerard Wertheimer, achieved $17.2 billion in sales in 2022, marking a 17% increase on a comparable basis. The brand experienced double-digit growth in all regions and across all product categories.

Useful links:
1. Chanel Official Website
2. Chanel on Business of Fashion