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French fashion house Chanel recorded its first sales decline since 2020, with revenue dropping 4.3% in 2023 to $18.7 billion and operating profit falling 30% to $4.5 billion. Amid slowing growth, the company has decided to revise its pricing strategy and pause aggressive expansion into new markets such as India, Mexico, and Canada.

According to Business of Fashion, Chanel CEO Lina Nayar and CFO Philippe Blondiau described the current luxury market as “challenging.” Despite the downturn, Blondiau emphasized that Chanel remains “very healthy” and is preparing for a rebrand under new creative director Mathieu Blasi.

“This result follows unprecedented growth, with revenues nearly doubling in three years. These are challenging times globally, and they remain so,” said Lina Nayar.

Fewer Price Hikes, But 48 New Boutiques Planned

Despite the decline in profits, Chanel has no plans to scale back its operations. The brand intends to open 48 new boutiques worldwide in 2024. Nayar stressed:

“We always take a long-term approach. Chanel has weathered ups and downs for over 100 years, and it is during these periods that we rethink what makes us unique.”

The main factor behind the revenue drop was decreased demand for leather goods, especially bags — the brand’s core product. Meanwhile, watches and jewelry experienced “dynamic growth.”

Chanel Softens Its Pricing Policy

In recent years, Chanel faced criticism for sharp price increases; for example, the iconic medium-sized Flap bag has nearly doubled in price since 2019. In 2023, the brand moderated its approach with an average price increase of 3%, which Blondiau said was “in line with global inflation, sometimes even lower.”

“We will continue this policy in 2025: monitoring prices and adjusting them in line with inflation,” the CFO added.

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