Chanel’s chief executive officer defended the luxury brand’s pricing after it raised the cost of one of its best-known handbags to more than €10,000 ($10,725).
The fashion label, known for its haute couture designs and fragrances, takes account of inflation and its high standards for materials and craftsmanship in setting prices, CEO Leena Nair told Bloomberg’s Francine Lacqua in a Leaders With Lacqua interview.
“We use exquisite raw materials and our production is very rigorous, laborious, handmade - so we raise our prices according to the inflation that we see,” Nair said.
Luxury brands like Chanel have made headlines in recent years for pushing up the prices of their often coveted goods. A classic medium-sized Chanel flap bag, for instance, rose above the €10,000 threshold for the first time in Paris last month.
Chanel tends to cater to the most affluent customers, on a par with those of Hermès International SCA or watchmaker Rolex, whose spending power typically remains resilient in the face of slowing economic growth or geopolitical turmoil.
Nair said the brand, founded more than a century ago by Coco Chanel, pursues “sensible and modest growth” as it focuses on preserving the quality of its products over the long term - an approach that’s made easier by its status as a privately-held company.
Nair, the former head of human resources at Unilever Plc, became Chanel CEO in January 2022.
She reiterated that the company has no plans to hold an initial public offering. Chanel is owned by the billionaire brothers Alain and Gerard Wertheimer, whose fortunes are estimated at $50 billion each, according to the Bloomberg Billionaires Index.
Founded in Paris but headquartered in London since 2018, Chanel reports its financial performance once a year, generally around late May. Revenue rose 17 percent to $17.2 billion in 2022.
The luxury goods maker behind the Chanel No. 5 fragrance seeks pricing harmonisation across the globe, and sometimes adjusts prices in different markets to ensure that, Nair said.
“Our clients shouldn’t experience excess price differentials. No matter where they buy, we want to stay fair to all our clients everywhere,” she said.
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22 май 2024
