Recently, Chanel International BV, a holding company of the Chanel Group, which was intercepted by foreign media, disclosed the 2016 full-year financial report submitted to the Amsterdam Chamber of Commerce in the Netherlands. According to the report, in the fiscal year 2016, Chanel Group's sales reached US$5.67 billion, down 9% year-on-year; net profit was US$874 million, down 35% year-on-year.
This is already the company's two consecutive years of sales, net profit and double decline. Analysts believe that the two years from 2015 to the present is the “transition season†of veteran luxury brands, but Chanel’s innovation in these two years is relatively conservative, and the ability to control the market is not good, and the continuous discount is also on the brand. The reputation has caused a certain negative impact, which has made the performance of Chanel more and more serious.
Are the faults caused by discounts?
According to the past information, Chanel's sales in fiscal year 2015 were US$6.24 billion, down 17% year-on-year; operating profit was US$1.6 billion, down 23% year-on-year. In FY2016, in addition to the above two indicators continued to fall, Chanel's net profit margin plummeted 610 basis points, from 21.5% to 15.4%. Operating profit plummeted 20% to $1.28 billion. Operating profit margin plummeted by 320 basis points to 22.5%. These figures all indicate that Chanel's operating profit margin has been more serious.
In terms of the decline in sales and net profit, Chanel said in the report that the decline in revenue mainly includes three aspects, two of which are changes in the portfolio and organizational structure, and on the other hand, because of the macroeconomic and industrial environment. factor.
Chanel explained that on the one hand, the company in the UK was divested and sold to another entity; on the other hand, the beauty business Bourjois was sold to CotyInc. in 2015, which led to a decrease in income in 2016; third, European tourism consumption The change in the pattern also had a negative impact on the company in the first half of the year, but sales in the second half of the year benefited from the Cruise series by 11%.
However, some insiders pointed out that after returning to the "global coordinated pricing" strategy in 2015, the discount strategy adopted by Chanel may also be the trigger factor for the performance slump.
Zhou Ting, dean of the Fortune Institute, believes that the general price reduction strategy of consumer products users may not be able to work in the luxury market. Although short-term discount promotions may win a portion of sales data for a brand in a short period of time, it may also lose the share of purchases of some loyal customers.
Can the shift of focus be able to restore the endgame?
As we all know, in the context of the generally poor retail market in the past two years, the profit margin of large-brand ready-to-wear products has become even thinner. On the contrary, sales of beauty products and make-up products have risen against the trend in recent years, becoming luxury brands. "profit cows".
However, even in such a good market situation, the Chanel Group's cosmetics and perfume business is still declining. Although the relevant data for FY2016 has not been disclosed by the media, the data in the 2015 financial report showed that cosmetics and perfumes that accounted for most of Chanel's profits fell 21% year-on-year, and overall operating profit fell 23%.
In April this year, "Women's Daily" published a "2016 Global Beauty Companies Top 100 list", based on the sales of beauty products in 2016, and Chanel ranked eighth in 2015 directly fell out of the top ten.
The Chanel Group itself clearly recognizes this problem. The marketing highlights launched in 2017 are mostly placed on this part of the business, such as the unprecedented promotion of marketing in the name of "the year of Gabrielle"; In the case of downhill roads, Chanel launched the new version of No.5L'eau perfume last year, and invited new generations of young artists such as LilyDeep as spokespersons; in terms of China, in April this year, Chanel opened the CocoCafé cafe in Shanghai. Mainly to stimulate the sale of beauty products.
However, whether these methods can make Chanel cosmetics and perfume business warm, it is still difficult to judge, after all, young faces with classic products, large-scale digital marketing, promotion these two years are not uncommon; in addition, from other competitive brands The pressure is also persistent.
For example, Chanel has always been proud of the ace category perfume: Chanel's rival, LouisVuitton of LVMH Group also pushed the perfume business 70 years ago last year. It is also in July this year, the LouisVuitton perfume series officially entered China. It competes with Chanel's Gabrielle launch in July; Gucci also released the first fragrance "GucciBloom", which was dominated by creative director AlessandroMichele, and plans to go on sale in China in November.
Too much emphasis on the show, honey or arsenic?
In fact, Chanel has always been innovative. After all, CocoChanel, the founder of the brand, developed a more relaxed version and fabric for physical activity in the 1920s. Subverting tradition and creating new ideas can be said to be the initial genes of the brand. But in the last two years, this "innovation" potential has been used elsewhere.
Compared to the bleak performance, Chanel is the most popular fashion show in the past two years - more accurately, it is a costly show. In the past autumn and winter high-definition show, Chanel built an "Eiffel Tower" in the Grand Palace, and in the autumn and winter high-end ready-to-wear show in March, Chanel built a rocket that can be launched.
It is undeniable that in the face of the millennial generation full of variables, the competition for the eye is the work that the brand must do. Chanel's visually beautiful show set has won a lot of attention for Chanel in a short time. However, Chanel, who spent a lot of energy and financial resources, also attracted a lot of criticism.
“I always feel that Chanel’s products have not changed in the past few years, especially in shoes and bags. Even if it is a wandering bag that has been burning for a while at the beginning of the year, it is slightly suspected of continuing the ancient style of the 1980s. It is not special. There are new ideas.†Fiona (a pseudonym), which has been purchasing on a social platform for a long time, has made such an evaluation of Chanel products. She revealed that in July, a client had ridiculed her to the theme of "Holy Classics" in the autumn and winter of 2017. There are several woolen coats and dresses, which are too similar to the classic models in her mother's wardrobe. She feels that these two years "There is no way to go around and not to enter the future." Gradually, these younger generations have lost their desire and impulse to understand and buy the brand.
Many people in the industry also believe that compared with the scenes and interesting topics of the show, the two years of Chanel's ready-to-wear products have not made much achievements in terms of innovative elements and innovative design.
“Channel, which emphasizes the layout of the show, is misleading the future direction of luxury brands, making fashion more and more superficial and unable to withstand scrutiny.†After the release of the 2017 Fall/Winter space series, well-known commentator AnaAndjelic even blamed Chanel. Unlike Lafayette Karl Lagerfeld, who is not working on product innovation, instead of pursuing topicality and over-emphasizing the show, it is not conducive to upgrading and innovation in the whole industry.
This edition was written/New Beijing News reporter Zhou Hongyan
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