Chanel expects slower 2009 growth but sticking to plans

PARIS, Jan 16, 2009 (AFP) - Chanel expects to see continued growth in 2009 but at a slower pace due to the economic meltdown, the head of the company's fashion division Bruno Pavlosky told AFP on Friday.

In 2008, the almost century-old firm created by French couture legend Coco Chanel saw "growth in all its activities ... that slowed down at the end of the year," Pavlosky said in an interview.

"For 2009 we expect a growth slowdown," he said, but added that "this will not be negative growth."

While 2008 took off on a positive note with double-digit growth, except in Japan where luxury products saw difficult times, 2009 would likely end with single-digit momentum, he said.

Chanel, whose fashion lines are the work of designer Karl Lagerfeld and which is not quoted on the stock exchange, traditionally refuses to divulge details on its turnover or results.

"Since July, like everyone else we have noted just how much the context has evolved and changed," Pavlosky said.

"So we are taking all the measures we believe are necesarry and adequate to manage our profit margin as best we can."

But Pavlosky said the luxury house's upcoming development projects would be maintained, notably the opening of new boutiques in Dubai, Russia, China and South Korea.

Last month Chanel called a halt to a mobile art exhibition featuring its iconic quilted handbag and chain in order to refocus on more strategic investments in these troubled times, and French unions said it was terminating up to 200 temporary staff contracts.

But Pavlosky said the employees were extra Christmas staff whose contracts had expired in December and that Chanel would continue to resort to temporary staff when necessary.

As for the handbag show, recently in New York's Central Park and due to have travelled on to London, Pavlovsky said it was halted as "we were out of step with everything that's going on."

The Chanel Mobile Art exhibition was housed in a snow-white spaceship-like mobile art gallery designed by Iraqi-born British architect Zaha Hadid, and included works by 15 artists inspired by the purse created in 1955.

Pavlovsky said there would be a follow-up to the show but that given the times "it was not the best way to communicate for the brand."

The exhibit began on February 27 in Hong Kong and then went on to Tokyo and New York. Due to have lasted two years, it was scheduled to travel to London and Moscow next year before ending in Paris in 2010.

The 180-tonne pavilion made of 700 pieces originally was built in Yorkshire in northern England and shipped piece by piece in more than 50 cargo containers.

by Dominique Schroeder