er recalibration across the luxury sector, long driven by Chinese demand and aspirational shoppers in the West.  Chanel’s global CEO, Leena Nair, attributed the contraction to “macroeconomic and geopolitical volatility,” noting its tangible impact on sales in key markets. Asia Pacific saw revenues fall 7.1 percent. The Americas declined 4.2 per cent, while Europe eked out a modest 0.6 per cent gain, buoyed by resilient tourist flows and local demand. Mainland China proved particularly difficult, as the fashion category encountered headwinds there. Still, strong performance in Japan and Europe partially offset the losses. Chanel’s beauty and fragrance business was lifted by makeup and skincare, while its watches and fine jewellery division turned in what the company described as “dynamic growth.” But overall, the numbers speak to a more uncertain landscape for luxury, where price hikes, inflation, and shifting consumer sentiment are beginning to reshape the market. “The brand, even one as iconic as Chanel, must contend with rising macro pressures, geopolitical risk, and operational complexity —  all while preserving the alchemy that makes luxury feel untouchable,” said Elaine Parr, a luxury analyst.  Despite the profit dip, Chanel appears undeterred in its ambitions. The company will maintain last year’s capital spending level of US$1.8 billion, up 43 per cent from 2023, pushing forward with 48 new store openings this year. Half of these will be in China and the US, with new outposts also planned for India, Mexico, and Canada. Notably, only six of the new stores will be fashion boutiques; the majority will focus on beauty, jewellery, and other high-margin categories. Beyond physical retail, Chanel is channeling US$600 million into its supply chain, further deepening its vertical integration strategy. This includes acquiring stakes in a silk supplier in France and a jewellery manufacturer in Italy to reinforce the brand’s control over quality and production at a time when luxury supply chains are under unprecedented strain. All this sets the stage for a pivotal year for Chanel, not just financially, but creatively. Matthieu Blazy, previously at Bottega Veneta, stepped into the role of artistic director for fashion on April 1. His first collection will debut in September. Pricing dilemma  In recent years, Chanel has led the industry in price increases, often cited as a bellwether for the sector’s march toward exclusivity. Last year alone, the house raised prices by around 3 per cent. But this year may mark a pause. Philippe Blondiaux, Chanel’s finance chief, told Vogue Business the company would not execute its typical biannual hikes this March and September due to “the extreme volatility of the context.” This decision comes at a time when tariffs, especially in the US, put further pressure on profitability. While rivals like Hermes have passed along the 10 per cent American tariff directly to consumers, Chanel has opted to maintain its global pricing policy, at least for now. “Other houses, from LVMH, Kering and other brands, followed suit in hiking prices in a bid to sustain their margins,” said Fabio Becheri, a luxury brand advisor. “What began as bold moves to preserve brand exclusivity mutated into price inflation.”  “Aspirational consumers, once the heartbeat of luxury’s expansion, have understood and, consequently, largely disappeared. The market that once thrived on accessible prestige is now imploding. Consumer sentiment has shifted.”  Indeed, Chanel’s very strategy of steep, repeated price hikes, once praised for safeguarding exclusivity, is now being reassessed as a catalyst for the growing distance between luxury brands and middle-class aspirants.  “Yes, each brand faces its own challenges: creative transitions, lack of innovation, geopolitical risks, supply constraints, tariffs. But the common denominator is clear: “uncontrolled price increases meet increasingly informed consumers.” Chanel, more than any other brand, lit this fuse and now bears a unique responsibility,” he concluded.