PARIS – The Chanel juggernaut came to a halt last year, as revenues fell for the first time since the coronavirus pandemic and operating profits plummeted 30 percent amid a sharp slowdown in luxury spending in Mainland China.

The French fashion house reported on Tuesday that revenues totaled $18.7 billion in 2024, down 4.3 percent at comparable rates, as growth in Japan and South Korea failed to offset the impact of macroeconomic and geopolitical volatility elsewhere.

Operating profit fell to $4.5 billion from $6.4 billion the previous year as Chanel continued to invest heavily in its store network and supply chain.

In an interview with WWD, global chief executive officer Leena Nair and chief financial officer Philippe Blondiaux said they saw an inflection in the first quarter of 2024 and expect little improvement this year, despite the arrival of Matthieu Blazy as artistic director of fashion activities on April 1.

“We continue to operate in a very challenging environment,” said Nair, adding that the house is taking a long-term view. “As a 100-year [old] brand, we expect ebbs and flows, and we will continue to navigate with a long-term strategy, which is why last year, we invested more than ever in our fundamentals.”

Chanel has declared a hiring freeze, with plans to maintain its headcount stable at 38,400 this year after hiring 10,000 people in the last three years, including 1,900 in 2024, mostly in the first semester, Blondiaux said.

The privately-owned company said earlier this year it was cutting 70 roles in the U.S., representing about 2.5 percent of its workforce there. Blondiaux denied reports that it plans to slash its headcount in China by 20 percent this year, clarifying that it plans “relatively minor” adjustments in regions where growth has stalled.

“For a company of our size going through this change of cycle, it’s normal, I would say, to adapt your structures in different places,” he said. “In China, we are adjusting our workforce to a large extent through natural attrition.”

Investments are also expected to remain stable, after a 43 percent jump last year, with capital expenditure forecast at $1.8 billion in 2025. Chanel plans to plug a record $600 million into its manufacturing network, as illustrated by its acquisition of a minority stake in Como-based silk specialist Mantero, Blondiaux noted.

Investments in “brand-support activities” were broadly stable last year at $2.45 billion, versus $2.46 billion the previous year, with key initiatives including a new No. 5 campaign featuring Margot Robbie, the new face of the fragrance, and Jacob Elordi.

“We set our own course in challenging economic conditions. We could have slowed down the momentum of investment. We’ve done the opposite. We’ve invested more than ever, and plan to do so in 2025 as well,” said Nair.

She detailed plans to open 48 new stores this year, including 22 new boutiques across key markets such as the U.S. and China, in addition to expansions in less-developed territories like India and Canada.

Chanel ended the year with 644 boutiques, up from 612 at the end of 2023, with openings including its first U.S. store dedicated to watches and fine jewelry on Manhattan’s Fifth Avenue, and its inaugural House of Beauty in Paris.

Nair emphasized that although Blazy will show his first collection in October, Chanel is not expecting immediate results.

“Matthieu is one of the most talented and gifted designers of his generation. His vision and understanding of the Chanel codes quickly convinced us that there is no one else better suited for the job, and we were very impressed by his mastery of natural, luxurious materials, his deep commitment to craftsmanship, the amount of time he spends in workshops, ateliers, really understanding the product and the craftsmanship,” she noted.

“Chanel is a profound brand. It takes time to understand the depth and the essence of our brand,” Nair continued. “We are having patience and perspective as Matthieu settles into his job. We don’t just think about the next collection or the October collection, but look at it long-term, because we know a vision takes time to unfold and it has impact over time.”

She paid tribute to the studio team, which has designed collections since June 2024, and thanked former creative director Virginie Viard for her contribution, noting that Chanel’s revenues nearly doubled over the previous three years.

Nair also highlighted key launches this year, including Chance Eau Splendide, which she flagged as the house’s first new fragrance in eight years, and the Chanel 25 handbag, which she described as “a huge success.”

Blondiaux said that after growing 23 percent in 2023, ready-to-wear sales have remained relatively resilient despite the absence of a creative figurehead – though he declined to provide figures.

“Ready-to-wear was one of the best performing product lines last year and this year, year to date, we are positive in terms of growth with ready-to-wear, so it really shows that the quality of the work done by the studio has been amazing, even in the absence of a creative director,” the executive said.

But Chanel appears to have lost some of its pricing power amid growing criticism of a series of hikes that pushed the price of its signature Medium Classic bag above $10,000.

After several years of twice-yearly price increases to reflect inflation in raw materials and harmonize its prices between different regions, it raised prices for fashion by 3 percent in 2024, in line with global inflation.

“It was more or less the same for all the product lines on average,” said Blondiaux. “And for 2025, we plan more or less to increase prices in the same way.” In the U.S., the brand is taking a wait-and-see attitude to prospective trade tariffs amid ongoing negotiations with the European Union.

Blondiaux declined to delve into the reasons why Chanel, which is owned by the secretive Wertheimer family, underperformed leading luxury sector peers last year. Hermès revenues rose 14.7 percent in comparable terms to 15.17 billion euros, while luxury conglomerate LVMH Moët Hennessy Louis Vuitton said revenues rose 1 percent to 86.15 billion euros.

“We never compare ourselves with competition, because we think our portfolio is obviously different from LVMH, we are operating in different geographies,” he said.

“We set our own course, and the way we navigate this crisis is, I would say, unique in terms of willingness to double down in terms of investments and consolidate our presence in different sectors,” he concluded.