(Bloomberg) -- Chanel Ltd., the fashion house synonymous with woven chain-link handbags, tweed blazers and No. 5 fragrance, posted a slump in sales last year as the pandemic closed boutiques and disrupted international travel.
Revenue dropped 18% to $10.1 billion, the closely held company said Tuesday. Operating profit fell 41%, a bigger drop than rival LVMH’s 28% decline.
While all luxury companies were hit by store closures during the pandemic, those able to tap into growing online sales and a rebound in China did better. Chanel has lagged rivals when it comes to boosting e-commerce capabilities, according to Sanford C. Bernstein analyst Luca Solca.
Asia has been a lifeline for the industry since much of the region exited strict lockdowns early last year, even as Europe remained mired in on-again off-again restrictions until recently. Revenue last year in Europe dipped 36% at Chanel, more than the 28% slide for LVMH. Currently, 20 Chanel boutiques remain closed out of a total of 206, a spokeswoman said.
Chanel didn’t disclose the performance of its fragrance and cosmetics unit. In general these products, which often rely on duty-free distributors at airport boutiques, are suffering from a lack of international travel as well as the obligation to wear masks outdoors in some countries.
Still, Chanel said its capital expenditure amounted to $1.12 billion last year, a record, confirming its “confidence in the future.” The company bought its New Bond Street flagship store in London last October, and also invested in technology, including digital initiatives.
Chanel “delivered a resilient financial performance in what was a very challenging period,” Chief Financial Officer Philippe Blondiaux said in the statement.
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