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

[EpiFanatic]

I work in finance and I might be the only one going eh, this is pretty standard. I saw a post here about inventory being 24 and the user being appalled, but without the notes to the financial statement, these are pretty useless numbers. If financial statements told us everything, I would not bother with the notes, MD&A or speaking to management. We don't even know how Chanel accounts for inventory for us to be appalled by that number.

Like your point number 2 is the most standard thing for a private company. I cover a porftfolio of private companies and a huge part of being private is you aren't required to disclose anything. Yes, you have the audited financials but those aren't public. What's the point of being a private company if you have to disclose your business?

I've not seen any mention of Capex here, or their working capital which would tell you significantly more than inventory.

Things like M&A are fairly common too. There could be so many reasons for M&A. It can be to penetrate certain geographies, or in the case of chanel, it would make sense for them to not only acquire smaller fashion houses, but leather tanneries, etc Without speaking to a company or having access to things like the notes or their MD&A, these guesses are pretty wild.

I was wondering the exact same thing about inventory. And yeah, no footnotes suck. But again we don’t even have the financials so I could not judge with confidence.

 

[Glitterbomb]

First off, I am not convinced that it isn’t non-bonded leather. If it isn’t, I bought it without asking whether it was bonded leather. Maybe that’s a lesson for me, if it matters enough to me. I can’t be a hypocrite about saying, “well I spent this much money, the materials are not sufficiently high quality”. I have been buying LV canvas for years spending thousands of dollars (worth minimal leather) on canvas! Man made materials! I bought it knowingly because it served my purpose and the bag as a whole met my criteria, which I won’t go into. And I do not have a single regret for spending thousands on a canvas bag that I love. I am not buying Chanel only for the materials. I love the look and feel and functionality, which regardless of material the Chanel 19 delivers for me. So I’m not angry. Knowing more about Chanel’s corporate practices tho is a different story.

I feel very differently. Chanel using bonded leather without disclosing it isn't the same as LV making bags with canvas. LV discloses their bags are made with that material. A $6000 - $9000 leather bag should be made with full grain, high quality leather. It is just shocking to me that some really do not care if Chanel is making some (or all) of their bags with the cheapest quality leather possible to maximize their profits.

 

[EpiFanatic]

This is absolute normal for any lambskin bag in a colour like this when worn with somth that rubs like a jeans jacket or whatnot. How IS chanel, or any other brand like hermes or Dior, supposed to make a lamb (!) skin (!) product durable? They can’t turn it into a fabric that withstands friction, and if they TRY and sell a coated version, ppl on here go out of their way to show and act shocked that the bag doesn’t absorb liquids etc. (Or ketchup or bleach).

Sorry but it’s just like they can’t get it right no matter what they do.

If they don’t coat the leather ppl scream how delicate it is.

If they DOntreat it to be more durable ppl scream that it behaves like fake leather (or is fake).

What do u want? ❤️❤️

I can understand this viewpoint. Different people buy Chanel for different reasons. And the long time loyal Chanel clients do want more information and more answers given their personal experience with Chanel. Even as a Chanel newbie I’m interested. And generally speaking many more people are interested in the origins of materials and in business practices. So I totally understand the desire for transparency.

 

[EpiFanatic]

I feel very differently. Chanel using bonded leather without disclosing it isn't the same as LV making bags with canvas. LV discloses their bags are made with that material. A $6000 - $9000 leather bag should be made with full grain, high quality leather. It is just shocking to me that some really do not care if Chanel is making some (or all) of their bags with the cheapest quality leather possible to maximize their profits.

You asked me if I would and I answered you honestly. You are absolutely entitled to your opinion and you should do what you need to do given what you feel and believe, and I won’t judge you for it. I’m sorry you feel the need to judge me, but again this is a public forum and you entitled to that opinion too.

 

[Glitterbomb]

You asked me if I would and I answered you honestly. You are absolutely entitled to your opinion and you should do what you need to do given what you feel and believe, and I won’t judge you for it. I’m sorry you feel the need to judge me, but again this is a public forum and you entitled to that opinion too.

I'm not judging you at all. Although I respect your viewpoint and opinion, I just personally find it shocking.

 

[EpiFanatic]

I'm not judging you at all. Although I respect your viewpoint and opinion, I just personally find it shocking.

Ok.

 

[Glitterbomb]

I loved Chanel (I owned 150 bags and countless amount of RTW, shoes, jewelry, etc at the peak of my collection) and it deeply saddens me to see what has happened to the brand I loved. I know many people still love this brand, but I just don't anymore. My love for Chanel has been killed by overly greedy and insensitive price increases while quality diminishes at a rapid pace. RTW with buttons commonly falling off, that you have to go out of your way to request to be reinforced while purchasing? Chanel bags known for crooked flaps, popped stitches, loose threads, straps that literally fall OFF the bag, and now likely bonded leather that peels within 30 minutes of use? It's not okay to pay $6000 - $9000 for ****. The net worth of the Wertheimers is $90 billion. We deserve better.

I remember the good ol' days of buying a $4900 medium classic flap in 2016...I never had to do my own quality control. To think the same bag retails today for $8800, nearly double in just six years, while the quality is now so horrible is repulsive to me.

 

[ItsPurseonal]

I work in finance and I might be the only one going eh, this is pretty standard.

Without speaking to a company or having access to things like the notes or their MD&A, these guesses are pretty wild.

You're not the only one - I'm definitely not discounting the fact that quality control is hugely problematic (and seems to have declined drastically), but there's only so much you can gain from these numbers - ESPECIALLY when trying to zero in on fashion goods because so much of their bottom line is presumably influenced by their beauty segment. I would have actually been surprised if their COGS scaled at the same rate as their sales.

Again, this is not to say that there (very well) might be something going on with decreasing quality of raw materials/production, but I wouldn't draw that conclusion just from seeing these numbers.

 

[gail13]

I loved Chanel (I owned 150 bags and countless amount of RTW, shoes, jewelry, etc at the peak of my collection) and it deeply saddens me to see what has happened to the brand I loved. I know many people still love this brand, but I just don't anymore. My love for Chanel has been killed by overly greedy and insensitive price increases while quality diminishes at a rapid pace. RTW with buttons commonly falling off, that you have to go out of your way to request to be reinforced while purchasing? Chanel bags known for crooked flaps, popped stitches, loose threads, straps that literally fall OFF the bag, and now likely bonded leather that peels within 30 minutes of use? It's not okay to pay $6000 - $9000 for ****. The net worth of the Wertheimers is $90 billion. We deserve better.

I remember the good ol' days of buying a $4900 medium classic flap in 2016...I never had to do my own quality control. To think the same bag retails today for $8800, nearly double in just six years, while the quality is now so horrible is repulsive to me

All of us have reasons we purchase luxury; in this case Chanel, and we might not know what draws us. Chanel has very strong brand recognition and they use the Coco story to strengthen it. The more I read about Chanel, the more I realize it was Karl Lagerfeld not Coco, and now that he is gone, Im not sure who they are anymore.

I also am a long time customer with a large collection and I bought because of quality and styles that were part of a designed collection. There was a reason not to grab the It Bag from a contemporary line. Knowing that my bag has a surface protectant on it is one thing, but knowing its not real high quality leather at these prices is absurd. Has anyone else noticed that many of the SA's rarely purchase items from these collections? They do not get many discounts these days and none on classics, but I find it interesting that even the long time SA's rarely have more than a few pieces.

 

[Ghettoe]

You're not the only one - I'm definitely not discounting the fact that quality control is hugely problematic (and seems to have declined drastically), but there's only so much you can gain from these numbers - ESPECIALLY when trying to zero in on fashion goods because so much of their bottom line is presumably influenced by their beauty segment. I would have actually been surprised if their COGS scaled at the same rate as their sales.

Again, this is not to say that there (very well) might be something going on with decreasing quality of raw materials/production, but I wouldn't draw that conclusion just from seeing these numbers.

Along with this, they have so many different segments, who even knows what's impacting the COGS more? Why is everyone so sure it's handbags?

 

[ntntgo]

Along with this, they have so many different segments, who even knows what's impacting the COGS more? Why is everyone so sure it's handbags?

I don’t thing those of us talking about the finances are talking strictly about bags & SLGs. If you read back, you’ll see that those of us with a significant background in co-creation, which includes annual reports, those of us who have to file annual reports for our own companies & are long time high end clients, are not strictly addressing handbags. I’d say leather goods but that would be an over statement.

Additionally, we are not addressing strictly Chanel Ltd as they are only a small percentage of the Mousse Partners portfolio.

This next part is not directed toward anyone or specific groups of people.

Let’s all take it down a notch and treat each other with respect as adults should (I’m assuming everyone is an adult here, although some of the comments lead me to believe otherwise). Some here just happen to know more than others.

This is a thread that started as one person @TraceySH having a peeling problem. It has morphed to a thread of information sharing. I know that I have learned a lot from others here and I am humble enough to admit it, regardless of what I do for a living or the size of my collection.

There’s absolutely no need to treat each other disrespectfully.

Lastly, there is nothing in this thread that puts TPF in a position to be warned or receive anything in writing from Chanel, Mousse or Litor regarding the information posted here. There is no trademark infringement and the Wertheimers are savvy enough to know that there is no basis for a libel suit. Not to mention that would open Pandora’s Box that I’m fairly certain they would not want. Therefore, this thread should continue as it is extremely informative.

Carry on.

 

[Swanky]

Reminder that we require respectful posts. Disagree all you want but do not get personal or attack members. Discuss the topic, not a member.

No one has to justify why they buy or don't buy, this thread may not change everyone's minds, which is fine!
It won't change my shopping habits personally. I don't just assume that every post online is completely accurate, I use my best judgement and make my own decisions. I've had a great experience with Chanel over the past nearly 20 years, I've had zero quality issues and have always had great service.
YMMV. . . but everyone does have to respect other's opinions!
Choose what's best for YOU!

 

[rainbowneko]

@rainbowneko thanks for the further clarification. I just clicked on some of your links and will examine in detail when I’m on my computer. Another thought occurred to me. Although obvious, the rampant price increases would have contributed to the huge increase in gross revenue without requiring COGS to have a proportional increase, explaining the COGS/gross revenue decrease from 2020 to 2021, this not necessarily indicating the use of lower quality raw materials or cost of construction per item. But again speculation given we don’t have the f/s by subsidiary. Would be awesome to see P/L by product line right? I wonder what 2022 gross revenue will look like given their worldwide purchase limitation? Off the top of your head you would think gross revenue would decrease but maybe the won’t be the case if it just allows the market to expand to buyers who had never purchased Chanel bags before, less bags per person but more “persons”, KWIM? But all my comments are an exercise in speculation without actual financials.

Yes, with regards to the COGS decrease from 2020 to 2021, might indicate potential cost-cutting measures. Using the other 2 companies' COGS as a reference, their COGS were closer to 30%, and Chanel's COGS was slightly under 20%, which was a bit concerning... Understand that not all chanel items' COGS were under 20% because the COGS in the f/s is the aggregate of all chanel lines eg rtw, beauty, bags, etc. Only the management accountants of chanel would know the actual COGS for each item they produced hahahaha.

I am also curious to know their 2022 gross revenue but i feel it would increase due to extremely high demand in Asia esp. mainland china customers!!

 

[rainbowneko]

I work in finance and I might be the only one going eh, this is pretty standard. I saw a post here about inventory being 24 and the user being appalled, but without the notes to the financial statement, these are pretty useless numbers. If financial statements told us everything, I would not bother with the notes, MD&A or speaking to management. We don't even know how Chanel accounts for inventory for us to be appalled by that number.

Like your point number 2 is the most standard thing for a private company. I cover a porftfolio of private companies and a huge part of being private is you aren't required to disclose anything. Yes, you have the audited financials but those aren't public. What's the point of being a private company if you have to disclose your business?

I've not seen any mention of Capex here, or their working capital which would tell you significantly more than inventory.

Things like M&A are fairly common too. There could be so many reasons for M&A. It can be to penetrate certain geographies, or in the case of chanel, it would make sense for them to not only acquire smaller fashion houses, but leather tanneries, etc Without speaking to a company or having access to things like the notes or their MD&A, these guesses are pretty wild.

Understood that chanel is a private company but don't you get disappointed as a consumer that you found out there are so many shady business decisions made by chanel like rampant price increases? like you spent thousands of dollars on bags, RTW, to realise your money doesn't heavily reinvest back to the company for a better good eg. better quality products, increase production lines so everyone won't be over panicking if they are unable to secure their desired seasonal items.

Note: i do not have any experience or understand the RTW price increase but here's my thought on classic flaps

Since the future price increases on classic flaps might or already surpassed some of the hermes products, and i don't think for price increases would actually lead them to be more exclusive in brand image. To me, I feel they are viewing classic flaps as infinite cash cow, trying to milk classic flaps' profits until the demand or trend to have that bag to die down

 

[rainbowneko]

First off, I am not convinced that it isn’t non-bonded leather. If it isn’t, I bought it without asking whether it was bonded leather. Maybe that’s a lesson for me, if it matters enough to me. I can’t be a hypocrite about saying, “well I spent this much money, the materials are not sufficiently high quality”. I have been buying LV canvas for years spending thousands of dollars (worth minimal leather) on canvas! Man made materials! I bought it knowingly because it served my purpose and the bag as a whole met my criteria, which I won’t go into. And I do not have a single regret for spending thousands on a canvas bag that I love. I am not buying Chanel only for the materials. I love the look and feel and functionality, which regardless of material the Chanel 19 delivers for me. So I’m not angry. Knowing more about what Chanel is spending their profits on may be a different story, for me.

agree!!! one thing that i would want to raise in this thread other than the financials is transparency to the customers