Despite the coronavirus pandemic slowly getting under control, French luxury goods company Chanel predicts that the lingering effects on the economy will impact the luxury sector for at least the next two years.
“We anticipate that the external environment will continue to impact the luxury sector negatively for at least the next 18 to 24 months,” says Chanel’s CFO Philippe Blondiaux in an interview with Reuters. Despite these predictions, the group has seen a 13 percent growth since 2019 and expects to end the year profitable. Previously having to shutter many of its retail locations, almost 85 percent of the group’s stores have now opened, with a massive sales rebound in China with some weeks going over 100 percent. Business is starting to resume in Paris, Milan, and Berlin as well, according tot he CFO. “This very strong performance with the local clientele will be insufficient to compensate for the absence of international business, for the absence of international visitors and for the fact that our duty free business… is still to a very large extent closed,” Blondiaux said. Preparing for the grim future, Chanel has decided to reduce advertising costs and promotions, cutting production, as well as reworking fashion shows.
Looking at the bigger picture, consultancy firm Bain & Company says the $310-billion luxury goods sector may see sales plummet by up to 35 percent this year.