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Why Chanel found the need to release its first annual report in 108 years

December 10, 2018 | Urja Khanna, Director - Client Strategy and New Initiatives

Chanel, one of the world's most illustrious names in luxury fashion, is still an independent player, competing with the likes of LVMH, Kering Group (Gucci) and Prada.

Last year, a leaked report, and much speculation revealed that the company's revenue in 2016 was $5.67bn (£4.44bn), down from $6.24bn the previous year. Net profit was down 35%, from $1.34bn to $874m. Net operating profit was $1.3bn, a drop of 20% on the previous year.

You'd think a 108 year old company that has withstood fashion trends, competition and acquisition all these years, would remain as nonchalant as Coco-Chanel's personality depicted in its advertising.

But at a time when consumers, employees, partners, vendors and influencers, are all demanding absolute transparency, Chanel probably realised its stiff upper lip may not be its strongest asset. 

It's general Report to Society, that only details its non-financial metrics, used to be a strong message in itself - We are not looking for investors, thank you. 

But today, after 108 years, it has chosen to create an even bigger statement by undressing its financials. It's no secret that Chanel has been facing stiff competition and amongst persistent rumours that it could be a potential target for a take-over, the French luxury house has decided to open up its books to show that it had the size, the numbers to withstand it all.

The figures released showed total sales for the 2017 calendar year were $9.62 billion, up 11% from the previous year on a constant-currency basis. That growth was primarily driven by sales in the Asia-Pacific region and in Europe, while operating profit came in at $2.69 billion. Net debt stood at $18 million, with free cash flow of $1.63 billion.

"We are not for sale, and absolutely nothing will change that. We realized it was time to put the facts on the table as to exactly who we are: a $10 billion dollar company with very strong financials, plus all the means and ammunition at our disposal to remain independent," Blondiaux said in a statement to the Times.
 

And so what?

The Annual Report is a tool not only to reach to investors/ potential investors but a medium to send a strong message to the society on its intent and standing.

Transparency is no more a buzz word, but right from manufacturing processes, pricing structures, dividends, financials, the annual report is crucial to let people in - so they may understand and believe in the purpose, intent and story, ultimately forging deeper connections.