n June, Chanel surprised analysts by revealing its annual results for the first time in its history. They are impressive: the Paris-based company posted sales of 9.62 billion dollars (around 8.3 billion euros) last year.

Operating income rose 22.5% in 2017 to USD 2.69 billion, resulting in an operating margin of 28%, and net income rose 18.5% to USD 1.79 billion.

This puts the independent brand neck and neck with Louis Vuitton (the pillar of LVMH), whose sales are estimated at over 8 billion euros, and ahead of Gucci (the pillar of Kering), with 6.211 billion euros last year. Hermès, another large independent Parisian house, recorded a turnover of 5.554 billion euros in 2017.

Chanel is neck and neck with Louis Vuitton, ahead of Gucci and Hermès.

“Our culture of discretion no longer served us”

Why did Chanel abandon its tradition of financial discretion, when it is not listed on the stock exchange, unlike its competitors (with the duty of transparency towards shareholders that this implies)? It’s a tradition the Maison shared in watchmaking with the two Geneva heavyweights Rolex and Patek Philippe.

“We realised that our culture of discretion no longer served us,” said Chanel CFO Philippe Blondiaux in an interview with Reuters. “Instead of having others report (about us), we’ve decided to put the facts on the table about who we are.”

Reuters asked whether this new transparency should be understood as a precursor to a possible IPO. The answer as categorical: “It’s exactly the opposite – this financial statement shows that we are amazingly solid financially and we can keep our status as a private, independent company for the next few centuries.”

A bonus for independent brands?

In watchmaking, Rolex, Patek Philippe, Audemars Piguet and Richard Mille – all independent brands – have outperformed the market and tend to gain share when the global market declines. They also dominate the growing auction sector (see Geoffroy Ader’s analysis on the subject here->http://www.europastar.com/time-business/1004090266-auctions-independent-dominance-explained.html]).

Like these brands, Chanel is benefiting from the opening of the Chinese market, which has grown to an unprecedented extent since 2000. But as a true global brand, there is probably little risk of its “overinvesting” in the Middle Kingdom; it prefers to retain complete control of its distribution chain.

Some 1.46 billion dollars were allocated in 2017 by the Parisian house to advertising and promotion (+14.5%) while 429 million (+10%) were invested in stores and technological tools. This amount is expected to double in 2018, Philippe Blondiaux explained to Reuters. In terms of e-commerce, the Parisian company has invested in the luxury online sales platform Farfetch.

Chanel has also successfully harnessed new technologies for its communication, notably to illustrate its rich history. Our readers can click here to find a digital retrospective on the house, called “Inside Chanel”.