Chanel’s Rise & STALL: Defects, Difficulties & Deflection (formerly the 19 tote saga thread)

[ntntgo]

Thanks for sharing the information which led me to use capitalIQ and factiva to do some research on this company.

I went to capitalIQ and Factiva and check on Chanel..... TRULY SHOCKING!!
omg i always thought Chanel (or other luxury fashion brands) is just a fashion house that focuses on outsourcing, marketing, and distributing products through their various channels. I'm so wrong and probably blinded by it.

what i understood is that there are more than 60 companies based on Factiva.. in addition, there are quite a few M&A activities going on in some of the subsidiaries according to capital IQ.. truly a Venture Capitalist firm hahahaha.

also, i managed to extract the financial statements (up till FY21) in Chanel UK for everyone's reference!!

edit: very smart of Litor Limited for setting up in Cayman Islands... no one knows (or at least in the Internet space) how much revenue or profits they are earning
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Nice job! I have access to Capital IQ but it is tiered based & customized based on geo & vertical.
Based on reading what you downloaded, that looks like it’s strictly the UK database, correct?

The point that stands out so prominently to me is the inventory turnover of 24. Seriously??? 24??? That certainly explains the quality deficiency now doesn’t it?

Do you have FactSet? Or preferably a Bloomberg account? It would be interesting to compare.

Regardless, now that Chanel via Mousse has been set up as a DBA of Litor which is hmmmm…set up in the Caymans, well that speaks volumes.

Thank you for delving deeper.

ETA: Your subsequent post that went up as I was writing makes all of us look like sheep now. Thank you for doing the due diligence.

 

[rainbowneko]

Nice job! I have access to Capital IQ but it is tiered based & customized based on geo & vertical.
Based on reading what you downloaded, that looks like it’s strictly the UK database, correct?

The point that stands out so prominently to me is the inventory turnover of 24. Seriously??? 24??? That certainly explains the quality deficiency now doesn’t it?

Do you have FactSet? Or preferably a Bloomberg account? It would be interesting to compare.

Regardless, now that Chanel via Mousse has been set up as a DBA of Litor which is hmmmm…set up in the Caymans, well that speaks volumes.

Thank you for delving deeper.

I do not owned FactSet and Bloomberg only CapitalIQ (limited settings) and Factiva. But the information provided by both of the websites are quite limited as well. As for the annual report provided by chanel also not detailed enough as compared to other companies they would do a breakdown on the sales based on the geographical locations. Seems like chanel is not transparent enough...

So i managed to dig out this critical information that was being locked because my organisation did not subscribed to it.. just wondering if we are able to know their trading partners, i feel that we can better understand where chanel gets their raw materials from etc

 

[rainbowneko]

Nice job! I have access to Capital IQ but it is tiered based & customized based on geo & vertical.
Based on reading what you downloaded, that looks like it’s strictly the UK database, correct?

The point that stands out so prominently to me is the inventory turnover of 24. Seriously??? 24??? That certainly explains the quality deficiency now doesn’t it?

Do you have FactSet? Or preferably a Bloomberg account? It would be interesting to compare.

Regardless, now that Chanel via Mousse has been set up as a DBA of Litor which is hmmmm…set up in the Caymans, well that speaks volumes.

Thank you for delving deeper.

ETA: Your subsequent post that went up as I was writing makes all of us look like sheep now. Thank you for doing the due diligence.

I'm more amazed by the ROE and ROC in FY21! The financial statement is under Chanel UK (should be Chanel UK subsidiary)

Reuploading the Chanel UK financial statements here.

Global/ overall Chanel financial statements (Chanel Limited) can be found in the above post link.

 

[TraceySH]

Tracey, you read like a novelist. It’s simply a joy to read your writing.

What a tremendous and humbling compliment. Wow, thank you

 

[TraceySH]

@ntntgo @rainbowneko THANK YOU guys for these deep dives and explanations. I am having a little bit of a hard time following b/c this isn't my area of expertise, but I am getting the gist.

In layman's terms....what does all this REALLY mean? Can you guys summarize how this conflicts (or doesn't) with our "consumer image" of Chanel?

 

[rainbowneko]

@ntntgo @rainbowneko THANK YOU guys for these deep dives and explanations. I am having a little bit of a hard time following b/c this isn't my area of expertise, but I am getting the gist.

In layman's terms....what does all this REALLY mean? Can you guys summarize how this conflicts (or doesn't) with our "consumer image" of Chanel?

In my opinion, as a new chanel consumer (because i only started my mini chanel bags collection a few years ago, didn't own any vintage pieces, not a vip client as well), after doing research and reading up on the financial statements uploaded by chanel limited, there are a few takeaways:

1. General consumers may think that the entire chanel brand is only by chanel limited (at least this is what i am thinking until today I did research on it). The fact that Litor Ltd is staying away from the limelight is already a big red flag as we do not have any idea whether the company is solely owned by Wertheimer family or mix of people. In addition, Litor Ltd does not have any official information eg. types of business activities surfaced on capitalIQ as well. As a consumer, i feel abit "cheated"/ doubtful because the money spent on chanel items might not be greatly reinvested to improve the quality of the products or even raise production line (pretty sure they have sufficient funds to do so). If chanel really reinvested to improve the quality of the products, there will be lesser people complaining on social media platforms!! from time to time i saw users posting their chanel issues on chinese social media app...

2. They are not transparent with the consumers with their financial statements because, on the chanel website, they only uploaded key highlights which are not really useful as compared to a full annual report. As a consumer, what kind of subsidiaries, joint ventures etc they are having as well because technically it helps to reduce production costs, and when Chanel said they increase prices for price harmonisation is really bs...........

3. They preach a lot on sustainability but they are churning out so many "fast-fashion paced" products... does it even make sense? I am not surprised if they are going to have 12 collections in a year in the near future!!

 

[lovieluvslux]

And you would be shocked how much this happens. I have shopped the LA Garment District for years and talked to countless merchants who sell to all kinds of people. You can buy stuff for $10 that resells for 10x the price and no one has any idea. And yes, the perceived brand perception is what sells it, not the actual quality.

Bringing back memories. I used to shop the LA Garment District (not sure if still exists today), over 15 years ago. I would find clothing, including some costume jewelry. Later would see some of those pieces in boutiques with a huge mark up. I get the boutique and stores has expenses, staff and commercial rental overhead, but I am very careful when shopping for clothing as I always think "how much was this top marked up?"

Back to topic, I no longer crave Chanel like I used to. The constant price increases, and the hunting bear mentality of finding the bag got tiresome. Then all the frustration and guilt, when I passed on an "it" bag, because I saw some YTber bragging about it. I've seen quality issues and re-thought the use of high end designer bags. For example, the bijoux chain is lovely. However, because of my rounded shoulders, I had a slippage problem. It go so annoying that I decided that style was not for me.

 

[ntntgo]

In my opinion, as a new chanel consumer (because i only started my mini chanel bags collection a few years ago, didn't own any vintage pieces, not a vip client as well), after doing research and reading up on the financial statements uploaded by chanel limited, there are a few takeaways:

1. General consumers may think that the entire chanel brand is only by chanel limited (at least this is what i am thinking until today I did research on it). The fact that Litor Ltd is staying away from the limelight is already a big red flag as we do not have any idea whether the company is solely owned by Wertheimer family or mix of people. In addition, Litor Ltd does not have any official information eg. types of business activities surfaced on capitalIQ as well. As a consumer, i feel abit "cheated"/ doubtful because the money spent on chanel items might not be greatly reinvested to improve the quality of the products or even raise production line (pretty sure they have sufficient funds to do so). If chanel really reinvested to improve the quality of the products, there will be lesser people complaining on social media platforms!! from time to time i saw users posting their chanel issues on chinese social media app...

2. They are not transparent with the consumers with their financial statements because, on the chanel website, they only uploaded key highlights which are not really useful as compared to a full annual report. As a consumer, what kind of subsidiaries, joint ventures etc they are having as well because technically it helps to reduce production costs, and when Chanel said they increase prices for price harmonisation is really bs...........

3. They preach a lot on sustainability but they are churning out so many "fast-fashion paced" products... does it even make sense? I am not surprised if they are going to have 12 collections in a year in the near future!!

I’m assuming, possibly incorrectly, that you work in finance because you have a better than most understanding of financials. Not to mention access (limited or not) to UK financials.

Chanel, Mousse & definitely not Litor as my clients. I do have all 3 of the conglomerates. LVMH, Kering & Richemont. So I have to be careful trying to access the Chanel accounts. Hermes was awarded for their financial transparency so it doesn’t take much to get their annual reports.

To your point #3, you are entirely correct about sustainability. They have no transparency regarding sustainability, DE&I or an org chart, including share holders. Yes folks, there are 14 shareholders in the Chanel Ltd company and they are not all Wertheimers.

The reason they put out the 2018 annual report was because they were raising capital.

The $5 billion taken out of Chanel Ltd (yes it was strictly that company within the portfolio) was not used toward the recent purchases of green companies, healthcare (mainly Brightside Health) and their most recent, Evolved by Nature which they put $120 million into. The divestiture in Ulta was a decent sized one.
Here is a link to Crunchbase that will not require the subscription that my company has. But it will show you the huge amounts of money has been put into other companies.

https://www.crunchbase.com/organization/mousse-partners/recent_investments

The only reason I’m spending time in this thread is because I would love people to educate themselves on where their money is going and why quality subsides while prices increase.

This is the behavior of a VC that is preparing to sell off their most famous name in their portfolio.

I’d like to reiterate that these are facts, not conjecture or opinions as some have implied.

 

[bagsamplified]

Yeah it's not leather. Neither is the 22 bag. Bonded leather at best. See the peeling above the chafing? NOT leather lol.

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Thank you for sharing this and so sorry you had to go through this. I wonder if the SLGs are like this, too. Such a shame.

 

[880]

there were sales every six months including bags that didn’t sell

There were 60% sales of seasonal bags, RTW, Shoes for many years. Prior to the print ad in the NYT, there would be a private day and clients would load up

2018 was the last time Chanel put out an annual report.

This is the behavior of a VC that is preparing to sell off their most famous name in their portfolio.

I believe there was an article possibly NYT, but I don’t remember surmising that the annual report 2018 was the clue that chanel was looking to sell (or at least appear a very attractive 15 billion USD company. I don’t remember details, and pls someone correct me if I’m off base. I also don’t know what the ratio iss re company valuation and multiples of yearly earnings

 

[EpiFanatic]

Hi Jamais!

Yeah, i compared the capitalIQ statement against the financial statement uploaded by chanel. Since the financial statement was audited by one of the big 4s, just take the capitalIQ a pinch of salt (i will remove it shortly cause i think it caused some misinformation!). The 43 million euros is the revenue of Chanel UK (assuming revenue from UK stores) in FY21 (sorry for the confusion because too many chanel subsidiaries slightly confusing!!)

here's the link provided by @Liberté https://s3.eu-west-2.amazonaws.com/document-api-images-live.ch.gov.uk/docs/L8aPwWhNSTnqPXB-kJSr5e7hDGyPCJhgEhu1UlUyLuA/application-pdf?X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=ASIAWRGBDBV3FTZ2YMQ5/20220813/eu-west-2/s3/aws4_request&X-Amz-Date=20220813T150559Z&X-Amz-Expires=60&X-Amz-Security-Token=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&X-Amz-SignedHeaders=host&response-content-disposition=inline;filename="companies_house_document.pdf"&X-Amz-Signature=575850bfd2711e7c9286e8a66266cb60f3fc20f42b67796f37ba1864d0131001

Consolidated financial statements refer to all the revenue and expenses added across all the subsidiaries. Since the financial statements denoted in million of US dollars soooooooooooooooo from what i observed..... i can say that the revenue for 2021 was 15b USD (i think its more accurate than the capitalIQ). In addition, how did i derive 15b USD? because refer to the second screenshot, their total intangible assets was 500usd (so in terms of millions, it should be 500 million usd, correct me if i'm wrong!).
Hence, operating profits for the FY2021 was 4b USD i think sort of makes sense also.

Referring to the last few pages you will note that there is a massive list of subsidiaries and most of them are wholly owned by Chanel..
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@rainbowneko thanks for this great info. Can you please explain again what business lines the “consolidated” f/s includes? Were separate b/s and I/s provided for each line of business to rollup to the consolidated ones? Were there footnotes to the f/s? I’d be very curious to read them. I will say I am sadly surprised at the very low COGS as a percentage of sales. But since this seems to include many different lines of business you cannot tell whether this is due to the fashion house p&l. Just not enough info here.
I just looked at Hermes f/s and if anyone is interested the p&l starts on page 40. And a few pages before that sales by region. Very interesting. Japan has its own line. Lol! But just based on the sales detail, I can clearly tell the amount of income generated by their various product lines. Interesting info. And their COGS as a percentage of sales is so much a higher than Chanel’s. WTH.

 

[zaraha]

I went to capitalIQ and Factiva and check on Chanel..... TRULY SHOCKING!!
omg i always thought Chanel (or other luxury fashion brands) is just a fashion house that focuses on outsourcing, marketing, and distributing products through their various channels. I'm so wrong and probably blinded by it.

what i understood is that there are more than 60 companies based on Factiva.. in addition, there are quite a few M&A activities going on in some of the subsidiaries according to capital IQ.. truly a Venture Capitalist firm hahahaha.

also, i managed to extract the financial statements (up till FY21) in Chanel UK (a subsidiary) for everyone's reference!! misinformation -> refer to the uploaded photocopied annual report audited by one of big 4s instead the photocopied annual report is Chanel Limited (which consolidated all subsidiaries' financial information, in this case, Chanel Limited is the parent company, and Lidor is the ultimate parent company.)

edit: very smart of Litor Limited for setting up in Cayman Islands... no one knows (or at least in the Internet space) how much revenue or profits they are earning
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WOW I feel more we dig deeper, more we don’t know about “Chanel”.
Thank you for sharing all this info…

 

[Taty]

During pendamic I fell in love with small classic size, after 10-15 years of heavily buying jumbos, maxis and mediums. I don’t recall running into lot of quality issues with those classics back then. I recently added the small classic; unfortunately I had to go thru about 5 major faulty bags to find a decent one.
Sorry pictures came out so big.
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So sorry this happened to you. I went through the same change since 2019, from all jumbos to small CFs, curiosity, may I ask what year was your black caviar from?

 

[Ghettoe]

For our next round, we have Clorox degreaser w/ bleach sprayed on, rubbed in and wiped off with a Clorox wipe, then put back under hot water, dried off. "Lambskin" LMAO.

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As someone who just randomly clicked on this with no clue about what this discussion is fully about. This has got to be the best bag advert I've seen. Chanel should send you a check because I've never cared about this bag until now. Now I'm like, maybe I need this bag!

 

[rainbowneko]

I’m assuming, possibly incorrectly, that you work in finance because you have a better than most understanding of financials. Not to mention access (limited or not) to UK financials.

Chanel, Mousse & definitely not Litor as my clients. I do have all 3 of the conglomerates. LVMH, Kering & Richemont. So I have to be careful trying to access the Chanel accounts. Hermes was awarded for their financial transparency so it doesn’t take much to get their annual reports.

To your point #3, you are entirely correct about sustainability. They have no transparency regarding sustainability, DE&I or an org chart, including share holders. Yes folks, there are 14 shareholders in the Chanel Ltd company and they are not all Wertheimers.

The reason they put out the 2018 annual report was because they were raising capital.

The $5 billion taken out of Chanel Ltd (yes it was strictly that company within the portfolio) was not used toward the recent purchases of green companies, healthcare (mainly Brightside Health) and their most recent, Evolved by Nature which they put $120 million into. The divestiture in Ulta was a decent sized one.
Here is a link to Crunchbase that will not require the subscription that my company has. But it will show you the huge amounts of money has been put into other companies.

https://www.crunchbase.com/organization/mousse-partners/recent_investments

The only reason I’m spending time in this thread is because I would love people to educate themselves on where their money is going and why quality subsides while prices increase.

This is the behavior of a VC that is preparing to sell off their most famous name in their portfolio.

I’d like to reiterate that these are facts, not conjecture or opinions as some have implied.

I have an accountancy background which explained why I question chanel's way of doing business. You are right that the real intention of chanel constant price increases is to fund VC/ investment activities instead of heavily re-investing back into chanel.

Thank you for sharing additional insights on mousse partners and their M&A activities! I found this an old article which might be helpful for others to read and understand what mousse partners involved in (if unable to access it, try to use private browser!)

How the Secretive Family Behind Chanel Is Reshaping a Big Investment Bet

Mousse Partners, the family office for one of the world’s largest fortunes, is reshaping one of its biggest bets.

www.bloomberg.com

Really appreciate that many people in this thread start to question this company and provide lots of useful information!! We are here to learn from one another!