Chanel to 'shed jobs' as China luxury goods market slumps

Cici Cao

Luxury fashion brand Chanel is said to be laying off employees in the China market, with some departments shedding as much as 50 percent of their workforce, mainland media report.

This stems from the dismal demand for luxuries in the country and addresses the impact of the brand's rapid expansion in the mainland in the past few years.

The company's chief financial officer Philippe Blondiaux earlier revealed plans to open more shops in the country, where the group now has 18 stores, below the industry average volume of 40 to 50.

Up to 50 percent of the layoffs will focus on administration, management personnel as well as staff in retail, while the company has suspended all recruitment activities in China, according to nofashion.cn.

Chanel's staff in charge said that they have not received any relevant information, and added that the company's operation is stable.

The brand's fashion shows in Hangzhou and Hong Kong in this quarter will not be affected, while the company will put expansion plans on hold, according to the source.

Chanel announced last month that a fashion show of its 2024/25 Early Spring Resort Collection will be held at the Hong Kong Design Institute on November 5.

Leena Nair, Chanel's chief executive, said the Chinese market faced sluggish demand for luxury goods while releasing the full-year results in May, even though the company recorded a growth of 15.8 percent in 2023, with the Asia-Pacific market surpassing US$10 billion (HK$77.72 billion) for the first time.

China's luxury market recorded an accelerated decline in the second and third quarters after the company's release.

French luxury group LVMH saw a record 16 percent decrease in sales in the Asia-Pacific market in the third quarter - the worst performance since the pandemic period - with sales in China falling by up to 25 percent in the third quarter.

The group is seeing a high turnover in management, following its cosmetics retail brand Sephora, which was said to be laying off roughly 10 percent of its over 4,000 employees in China.

In addition, the Federation of the Swiss Watch Industry said Swiss watch exports to mainland China plunged nearly 50 percent year-on-year and exports to Hong Kong slipped by 34.6 percent year-on-year in September due to dismal demand.

In February, French luxury brand Dior postponed its Hong Kong fashion show, one of 80 mega events slated for the first half of the year by the Culture, Sports and Tourism Bureau, amid China's economic uncertainties. The company said in a statement that the show had been "postponed indefinitely," but did not provide further details.