3. Shreya Jain
Post Graduate Diploma in Luxury Brands
2013-2014
Integrated Term Project
Brand Extension
LIVING WITH CHANEL

4. LIVING WITH

8. ACKNOWLEDGEMENT
I would like to gratefully acknowledge to all those who gave me constructive
suggestions for the improvement of all the aspects related to this project.
In particular, I would like to thank Mr Love Ranga who helped me throughout the
project work and gave significant ideas which made this project a success.
I would also like to thank Mrs Shefalee Vasudev, Mr Baba Anand, Ms Supriya, Mrs
Shalini Kumar, Ms Gayatree Sehgal, Mr Kurien Joseph, Mr Virender Malik, Mr Rahul
Jain and Mr Ramesh Tahiliani for giving their valuable inputs and in-depth knowledge
related to different areas of this project.
I would specially like to thank Mrs Deepti Bhadbhade Jain for helping me with this
intense project. Without her it would have been impossible to showcase the window
and sketches.
I also owe a great deal of thanks to my parents who always boosted up my morals and
encouraged me during the suggestion period of this project.
I have a great pleasure in thanking them all for their generous help in this project. My
project has been a success only because of their guidance.
Shreya Jain
i

10. CERTIFICATE
This is to certify that the project report titled ‘Brand Extension of Chanel into Home
Décor - LIVING WITH CHANEL’ is conducted under the guidance of Mr. Love Ranga
towards the partial fulfilment of the requirement for Award of Post Graduate Diploma in
Luxury Brands at Pearl Academy, New Delhi.
Shreya Jain
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12. ABSTRACT
This project report examines how luxury fashion brands extend themselves in order to
balance the exclusivity that is associated with luxury goods and with profit
maximization. Chanel is the brand on which the study is conducted. The study throws
light on the brand’s heritage and its connection to the present. The report mainly
focuses on the marketing strategies which are developed keeping in mind the brand’s
ideology. The limitation of the study is that more detailed research of the market is
required. The finding shows that brand can easily enter into a new market because of
its strong brand image.
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14. TABLE OF CONTENTS
1. Acknowledgement i
2. Certificate iii
3. Abstract v
4. Synopsis 1
5. Literature Review 5
6. Concept 17
7. Swot Analysis 29
8. Marketing 35
9. Visual Merchandising 45
10. Competitors’ Financial Analysis 51
• Hermes 52
• Ralph Lauren 63
• Risk Management-Hermes 64
8. Conclusion 66
9. Bibliography 70
10. List of Figures 72
11. Annexure 75

16. SYNOPSIS

17. TITLE
Living with Chanel is the brand extension of Chanel into Home décor.
INTRODUCTION
Known for classic couture like "the little black dress" and famous fragrance Chanel No.
5, Chanel has been an haute name in fashion and cosmetics for decades. Gabrielle
‘Coco’ Chanel reinvented fashion by transcending its conventions, creating an
uncomplicated luxury that changed women’s lives forever. She followed no rules,
epitomizing the modern values of freedom, passion and feminine elegance. The project
focuses on the launch of new home line by Chanel through wallpapers and decals.
SIGNIFICANCE
From the little black dress to the tweed suit, the quilted handbag to the two-tone shoe
and camellia brooch, the perfect red lipstick and the world’s best-selling fragrance N°5,
the list of Chanel’s innovations is unparalleled. Chanel has inspired women of all ages
all over the world with its timeless modernity.
“To really live the luxurious life, one must be surrounded by it.”
This brand extension focuses on the luxury customers who want their favourite brands
to diversify from their signature fashion lines and enter their living rooms through
lifestyle products.
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18. OBJECTIVES
1. To extend Chanel into home décor keeping intact the brand ideologies.
2. Understanding of the Brand’s Philosophy, Heritage, Craftsmanship, Identity.
3. Exhibition of innovation in conceptualizing Marketing Strategy for the proposed
Brand Stretching.
4. To create a window to showcase its entirely new line of décor.
5. To study and compare its financials with its competitors.
PROCESS DESCRIPTION
1. Study the brand history and its heritage.
2. Create coloured graphics of Wallpapers and Decals using software Photoshop.
3. Create a presentation for the creative designs for décor in an artistic fashion.
4. Create a concept of the window using the software SketchUp.
5. Make a life size window showcasing the wallpaper in a luxurious way.
6. Create an in-depth report having detailed information regarding the product and
the brand.
LIMITATIONS
1. No existing financial accounts in décor by the brand.
2. Real size products like table, sofas, etc. cannot be used for the Visual
Merchandising.
3. Huge line of lifestyle products like extending the brand into carpets, chandeliers,
floor lamps, mirrors, etc is too vast and therefore cannot be done.
3

20. LITERATURE
REVIEW

22. Designer, visionary, artist, Gabrielle ‘Coco’ Chanel reinvented fashion by transcending
its conventions, creating an uncomplicated luxury that changed women’s lives forever.
She followed no rules, epitomizing the very modern values of freedom, passion and
feminine elegance.
“A girl should be two things: classy and fabulous.”
This simple statement captures the essence of her revolutionary contribution to culture.
Chanel continues, after almost a century, to inspire women of all ages all over the
world with its timeless modernity.
From the little black dress to the tweed suit, the quilted handbag to the two-tone shoe
and camellia brooch, the perfect red lipstick and the world’s best-selling fragrance N°5,
the list of Chanel’s innovations is unparalleled. Chanel has continued this glorious
heritage of creation, playing fearlessly with Coco’s radical legacy, offering a vision for
the future of the House that is as memorable as it’s past.
Chanel has always ensured that its creator’s persona is very evident in the brand and
the logo for Chanel has not changed since its inception and so has created a world
recognised brand.
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23. Chanel’s marketing strategy has always been one of innovation, in spite of her
unchanging label; Coco Chanel has regularly re-invented herself to align her fashion with
current trends.
Upon her first foray of success, Coco Chanel introduced a selection of different items.
Her three piece suit, which is still modern today, was the first of its kind. Chanel’s
innovation and penchant for re-invention and moving into new markets saw her release
perfumes and move into the area of dress jewellery. This expansion into new markets
helped the Chanel brand to grow and prosper. When Coco Chanel returned to limelight
after a hiatus during the 1940s, fashion had seen a new star in its firmament, Christian
Dior. Chanel accepted this challenge by one again re-inventing her clothing lines and re-
designing her haute couture clothing, three piece suits, and perfume and costume
jewellery in line to meet to meet modern to meet wants. In fact she even introduced
men’s fragrances and aftershaves, unheard of for a woman designer to do at the time. It
is this constant reinvention and fearless ability to change with the times that saw Chanel
succeed.
Chanel’s personal ability to keep up with the times while maintaining an individualism and
recognition of her brand along with her drive, have ensured that the Chanel brand is still
at the fore today.
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26. LUXURY MARKET FOR HOME DÉCOR
For years luxury brands have used their established name to venture into new markets
in the hopes that their customers will follow and for the most part have been quite
successful. Luxury today has become more than just an indulgence. For the high-flyers,
it’s no longer restricted to soft goods – a high-end bag or branded clothes. To really live
the luxurious life, one must be surrounded by it. Today, favourite high-street label can
not only provide us with clothes, accessories and perfumes – it can even help us
decorate our home. Now it’s not just us, our home too can look dressed to the nines in
high end décor.
The connection is apparent – what fashion and home décor have in common is the
importance given to fabric as well as the emphasis on design. As with haute couture,
décor too is easily altered by the fabric used and in both cases, a well-designed piece
is priceless.
Designer labels have found a successful niche when it comes to decorating the home.
The move into décor seems to be a natural progression for high-end luxury brands and
one of the pioneers has been Ralph Lauren. The Ralph Lauren Home line has been
manufacturing bed linen, lighting and even paints! Clearly a visionary, the brand now
retails across the globe and even does customised interior decoration.
Designer Vera Wang is a name to be reckoned with across runways and while most
brides would kill for a wedding dress that flaunts her label, they can now do up their
new home with her creations as well. Started in 2006, Wang’s home-ware collection has
bed linen, tableware and textiles, and all of that in the subtle colours, delicate prints and
elegant luxury that has become the brand’s trademark.
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27. A recent entrant into the sector is Hermès with Hermès La Maison that debuted its
homeware collection at Milan in 2011. Cushions and blankets with the familiar ‘H’,
porcelain cups with their beautiful paintings in pastel shades and furniture that
incorporated Hermès’ signature leather accents – for those who swear by the brand,
there’s a lot more of them now.
Versace launched their design collection, Versace Home, in 1992 when they pioneered
the way for luxury brands’ invasion of the home-ware market. Versace eased their way
in with the release of high-end bedding, which quickly evolved into a complete line of
home goods. It catered to all the housing and dining needs to the luxury consumer,
and in the same opulent style characteristic of the fashion house. From fabric for
furnishing to cutlery, crystal and porcelain – for loyal Versace customers, there was a
lot more to choose from.
Fendi Casa, the décor branch from Italian fashion house Fendi, has been creating
magic for the last 13 years. Their latest collection shows the same strong Italian design
sensibilities that the fashion brand has made famous and every piece manages to look
modern and contemporary without compromising on good old fashioned classic
comfort.
If luxury is to be really experienced, then Fendi’s use of exotic materials like onyx,
layered hide, marble and more will ensure that your interiors are luxurious in every
way. The opulent bedroom done up in glossy, white lacquered wood will ensure that
even when you are relaxing in your inner sanctum, you’re never low on style and
luxury. Accessories from chandeliers to vases and hand-blown Murano glass ware are
only part of an exhaustive list of options for those looking to give their homes a
luxurious update.
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28. Armani/Casa was founded as part of Giorgio Armani’s vision of a comfortable yet
sophisticated living space that reflected the brand’s minimalist, ultra-chic style
statement. With an eye for the tiniest details and a classic style that has become the
brand’s forte translated into the décor at Casa, the interiors at Armani/Casa are
definitely living up to its name, since 2000.
Iconic designer Diane von Furstenberg has specially designed an entire suite at
Claridge’s in London. Done up in eye-catching colours and incorporating the latest in
technology to make the rooms as luxurious to live in as it is to the eye, the rooms have
a classic elegance that is characteristic of Diane von Furstenberg. It is also the best
possible example of a great fashion brand extending its reach into arenas where its
expertise is equally appreciated.
Italian fashion house Missoni too has made a foray into the hotel business with Hotel
Missoni, a lifestyle hotel chain. Their first property was Hotel Missoni in Edinburgh in
2009 and a second one in Kuwait. The hotel has same brightly-coloured aesthetic and
eclectic luxury that the brand is known for in its couture.
Décor is the perfect medium to bring together fashion and luxury. The idea of creating a
living space that combines our favourite luxury brands with utility makes the package
even more irresistible. Sporting our favourite labels is no longer enough – one has to
live the brand!
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30. EXTENSION
This project focuses on the extension of Chanel into home décor that is distinct in its
class, elegant, sophisticated and timeless. It is the extension of experience for the
luxury customers who want their favourite brands to diversify from their signature
fashion lines and enter their living rooms through lifestyle products.
The biggest temple of memories of Mademoiselle Gabrielle Coco Chanel life and times
is her house in Rue Cambon in Paris. This is the exact same house where her first
fashion show (on the mirrored staircase) was held. One can see Chanel's love for all
things feminine, pretty, sexy and stylish in her apartment. The bedrooms and sitting
rooms, the artefacts and the upholstery, the art displayed there shows a life well lived
and loved. She was about pearls, black and white, she was about style and
sophistication in her fashion personality. It is this house that reveals the roots of her
personality, roots that are not all visible through her fashion collections. Living with
Chanel is the closest dream one can come near to having Chanel’s lifestyle.
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32. CONCEPT

34. A land of secrets, dreams and fantasies; a sanctuary protected from the ravages of
memory – the apartment at 31, Rue Cambon is the place where the Chanel legacy is
preserved. The original designs, the heart of a fabulous house that has never stopped
beating, are still pulsing to the rhythm of the future.
The magic, the miracle of Chanel – now an empire as famous and as seductive as its
founder – is echoed in the strong link between past and present. The connection
between an original design and its modern interpretation is a fascinating one. These
‘relics’ of elegance have lost none of their seductive appeal today, because they show
how a style was born. When displayed next to their modern-day incarnations, they still
seem utterly contemporary.
She epitomized Parisian style and was effortlessly chic, wearing mostly black, with the
occasional white and grey, paired with her signature pearls.
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35. What truly inspired Coco Chanel was:
BLACK AND WHITE
“I have said that black comprises everything. So does white.
They possess absolute beauty.”
The essentials of extreme chic, black and white are synonymous with the purity and
simplicity of line.
PEARLS
“A woman’s true value counts most when she shines of beauty and grace.”
Pearls reveal Mademoiselle’s most feminine aspect. Displaying her artistic freedom and
creativity, she multiplied the number of strands on her own necklace, a gesture which
became a reference for Chanel watches and fine jewelry. Full of life, the pearl captures
light and reacts to every movement of the wearer’s body.
STARS AND CONSTELLATIONS
“I wanted to cover women with constellations! With stars! Stars of all sizes!”
An infinitely modern symbol, the comet leaves behind a trail of the most elaborate
dreams of happiness and freedom.
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38. MATELASSÉ
“Elegance is in the lines.”
Coco Chanel became a passionate for horse racing and the diamond-patterned quilting
of the stable lad’s jackets for its graphic, practical aspect, and for its suppleness. Thus,
the famous handbag was born. With the purity of its lines, it embodies the perfection
and simplicity that characterizes the Chanel style.
CAMELLIA FLOWERS
“The seeming simplicity of a masterpiece is sure proof of its grace.”
The camellia appealed to Chanel’s taste of provocation due to its reference as the
forbidden flower, both androgynous and ambiguous. Without perfumes or thorns, the
camellia seduces by its simplicity. Coco Chanel adored this flower for its almost
geometrical roundness and the regular perfection and classical order of its pure white
petals.
The new home line is entirely inspired from these essence of Chanel. Inspiration from
Chanel logo: Interlocking C’s (which was inspired from the window design of the
convent of Aubazine where Coco stayed as an orphanage) and the Chain pattern has
also been taken. The key is the classic and iconic design that Chanel has used across
designs to create their brand. The Wallpapers and Decals will bring the fashion house's
fabulous glamour and luxury into everyday living giving a feel of LIVING WITH
CHANEL.
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39. These wallpapers will be exclusively hand-crafted by trained craftsmen in the
manufacturing plant owned by Chanel in the heart of France.
Wallpapers with different patterns, leather feel and quilting will be available. Among
these a very interesting scented wallpaper will also be hand-crafted. The wallpaper will
be comprised of fibres that naturally give off a soothing and exquisite fragrance of
Chanel No.5. It is fabulous, effervescent slice of modernist art that bounces off the
skin. Timeless is in its beauty, its integrity, its Parisian style, and its uncompromised
quality. This fragrance is a symbol of a real woman; a woman who knows who she is,
where she’s going, and exactly how to get there.
A very special feature of wallpapers would be blocking of signals, in the interest of
privacy. The wallpapers will be coated with a silver ink which forms crystals that block
signals. These coating will be done according to the customers preferences whether
they want wallpapers in their living room or study room.
A very unique technology is being developed related to wallpapers that can help keep
a masonry wall from falling in an earthquake. This technology will be used by Chanel
to make its product distinct in the market. The wallpaper will uses glass fibre
reinforcement in several directions and a special adhesive which forms a strong bond
with the masonry when dry.
Wallpapers will be peelable, washable, colourfastness, scrubbable, stain resistance
and stripabble. The longevity is for 25 to 30 years.
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42. Wallpapers will be available in different sizes which will range from 39 inches x 50 feet
to 30 inches x 33 feet. The size will depend on the individual pattern of the wallpapers.
Decals will be made of Vinyl which will vary in sizes depending on the various design
customers chooses according to their likes.
Chanel has been voted to be the 2004 Company of the Year: Excellence in Packaging.
The wallpapers would come in rolls which will be packed in boxes made of caviar
leather Chanel uses in its handbag. The availability of boxes would come in various
colours like black, white and beige. Size of the boxes will depend on the size of the
wallpapers.
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44. SWOT ANALYSIS

46. STRENGTHS
1. Strong Brand Image: The story of stylish Coco Chanel, who famously said
“Fashion fades but style remains”, conveys a very strong message of Chanel’s
timeless elegance style.
2. High Quality: Beauty is the details. Chanel is famous for her tweed fabric,
embroidery, chain and button, fragrance Chanel No. 5, quilted handbags and
Chanel suit.
3. Cult Designer Karl Lagerfeld: Always reinventing Chanel, he is known to have
changed nothing yet everything about Chanel. Always daring to try something
different for each show, keeping the consumer’s interest in Chanel.
4. Excellent Management: Training for Chanel’s associates is critical to differentiate
them with their service. Consultants are sent to Paris to understand the heritage
of the house and gathered for conferences for updates, acknowledgement and
training for new products.
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47. WEAKNESS
1. Website: Does not provide prices. Customers have to make calls or personal
trips to the stores to find out the prices.
2. Limited Geographic Coverage: Chanel boutiques are known to be exclusive
and large-scale. However, they are missing out on expanding in many critical
places in Asia, like China.
OPPORTUNITIES
1. Expanding deeper into Asian Markets: There is a huge economic growth in
Asia, specifically in China and India. Chanel can consider opening up more
stores to meet the increasing demands for luxury goods.
2. Tap on Technology: Youth embrace social media and blogs. Chanel must
consider increasing marketing in this area in order to not to be obsolete.
THREATS
1. Counterfeit Goods: A prevalent issue that can be difficult to distinguish and
control.
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48. "Success is often achieved by those
who don't know that failure is inevitable."

50. MARKETING

51. The House of Chanel is a place where tradition meets creativity. Chanel’s combination
of tradition, originality and style has made it the most seductive of brands. Apart from a
long history, Chanel’s strength lies in cult designer Karl Lagerfeld who has never failed
to interest consumers and a management team that is highly effective in preserving
and promoting the brand image and is attuned to the consumer’s needs and market
trends.
MARKET SEGMENTATION
Chanel customers are woman who want to identify what Chanel represents which is;
Elegance, Simplicity, Modern and Class. It is targeting women who are stylish and
wants a luxury lifestyle.
For its new home line it is targeting woman of age 25 and onwards with high income.
Chanel will extend its already existing market. Asian market which has a lot of potential
customers especially in India will increase the company’s market share.
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52. MARKETING STRATEGY
In his 25 years as creative director of Chanel, Karl Lagerfeld has not only safeguarded
the towering legacy of Coco Chanel but has also enhanced it by turning the house into
one of the most powerful and profitable brands in the world. The Brand has built up a
brand equity and loyalty. The values of the brand has never changed and this is a
reason that it has managed to stay above the rest.
The very special scented wallpapers with its iconic fragrance will be priced at €5900.
Its wallpapers with distinguishing features will range from €2400 to €7100. Decals will
be sold from €600 to €1000.
The strategies it will use to market its new line and to keep intact with the brand
ideology will be done in the following ways:
The new home décor line will be launched in January through a launch party where
famous celebrities, personalities, art lovers, media channels will be invited. A house will
be fully constructed especially for the launch party of its wallpapers which will depict
the Chanel lifestyle through various lifestyle products. The whole house would be an
exhibition so that people can connect themselves to the walls.
Artwork by Karl Lagerfeld will be displayed all over the house which would highlight the
essence of Chanel. Each and every artefact will reflect the brand and Coco Chanel’s
legacy as a passionate patron of the arts. During the launch there will be a film shown
all over focusing on the production of wallpapers which is hand-crafted and on its
various designs. Through the online media this launch party (limited photographs) will
be all over the internet introducing the world to Chanel’s new home décor line.
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53. 'Keira Was Genius, No?'
Karl Lagerfeld Says Keira Knightley Made A Better Coco
Chanel Than Audrey Tautou

55. Keira Knightley is already associated with Chanel as the face of the brand’s Coco
Mademoiselle perfume campaign for almost 7-8 years. She will be the face of Living
with Chanel. Keira is a perfect face because she is always incredibly alluring and
seductive. Her personality will not look out of place in the Forties or Fifties, and that's
why she is chosen - to show a timeless chic that will never fade.
She will feature in print advertising and ad film which will show her fascination for the
designs of wallpapers that she has in her house which makes her feel mesmerized.
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57. New Chanel stores will be opened in the main metropolitan cities of the world. These
stores would exclusively be set up to sell the experience of LIVING WITH CHANEL.
This will be done to enhance the relationship with the customers and give personal
attentions to their needs.
A new website will be created with detailed information regarding its new home line
displaying the detail image of the exclusive wallpapers and decals. Customers can find
this website through Chanel’s official website: www.chanel.com.
Chanel will also publish its own magazine named Living with Chanel which tells the
story of Chanel entering into home décor. These magazines will be available in all
Chanel owned stores worldwide.
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60. VISUAL
MERCHANDISING

62. The secret of Chanel Boutique’s experience of inviting, alluring and welcoming lies in
its Visual Merchandising. It uses a variety of merchandising techniques to build an aura
of prestige, glamour and opulence for their brand. It creates an atmosphere which
appeal to all of the senses in their retail spaces and sends a message of chicness and
exclusivity.
Always a feast for the eyes, display windows of Chanel attracts the attention of every
person crossing the store creating a desire for the want of the brand. It leaves them
mesmerized because of the wonderful and hi-tech usage of lights and colours. The
Visual Merchandising for the project has been designed in a way to keep the
composition simple and elegant, embodying the brands image perfectly.
The focus of the window is a wallpaper which showcase the brand’s new product. The
window is given a black opaque acrylic outline to keep up with the brand identity.
Acrylic is an easily moulded plastic with glossy surface. It is available in various colours
and various sizes with different optical properties like transparent, translucent and
opaque. Base of the whole window is made up of transparent acrylic with Chanel
written in the centre made up of black opaque acrylic again.
Lights play a very important role in visual merchandising. The window will have cove
lighting all around it to give more focus towards the centre of the window where
wallpaper will be displayed. A leather textured Chanel wallpaper will be displayed
which will be pasted in the centre. It will be flowing towards the ground showcasing
how well it will run on the walls and how amazingly it will change the whole look. It will
be rolled at the end to give a 3D effect.
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64. The window is 5 feet x 3 feet in size which will be placed little high above the ground
level so as to maintain the eye level of a normal human being. Acrylic being very light
in weight, the whole window will be pasted on the walls.
The window has a perfect look of Chanel which will fascinate everyone looking at it
creating a thought in their minds as to, ‘What Chanel has to offer now?’
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66. COMPETITORS’
FINANCIAL
ANALYSIS

67. HERMÈS
The 175-Year Old French Fashion Empire
The French fashion empire Hermès will teach every fashion brand what it takes to
endure and rise above other luxury brands for more than 150 years. Deemed to be one
of the world’s most valuable luxury brands, Hermès has proven to transcend the luxury
brand industry, while setting new trends and immortalizing their iconic products.
Hermès has become more than just a French high fashion house or a fashion brand,
but owning an Hermès product has become a kind of experiential currency. It has
continued to emphasize the value of hand craftsmanship and has continued to pay
tribute to its rich history.
The Hermès Fashion House was established in Paris as a harness making shop in
1837 by Thierry Hermes (1801-1878). Thierry Hermes started handcrafting horse
harnesses for caliches and carriages in 1837. Due to this training and background, one
can just imagine the power of horses and the concerns related with leatherwork.
Thierry Hermes was able to craft an exceptional saddle stitch which was later on
appreciated and renowned by the European royalty. During the 1970’s, Hermès
expanded their brand and started creating international shops, reaching big and rich
countries such as Europe, U.S. and Japan. This was a tough time for the brand as
more competitors were starting with their own innovation, paving the way for more
brands to create their own names in the industry. Hermès is undeniably not the brand
that will get discouraged by other new fashion houses. With its impressive history,
dedicated leaders, and creative minds behind the brand, Hermès has proven that it will
continue to be the world’s top fashion brand. It has proven its strength in the midst of
declines and downfalls of global economy and the surge of other competing brands.
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68. It has continued to grow as though people will never stop saving money for this high
fashion brand. More than the design, the innovation, and the creative minds behind
Hermès, the brand has withstood the challenges of modern markets, the demands of
the industry, and the tightening competition all because of its rich and wonderful
history. In 2008, Hermès already had 14 divisions catering and selling a wide selection
of products; perfume, jewellery, menswear, footwear, clothing, leather, luxury goods,
ready-to-wear, scarves, ties, and everything else you can think of. In the U.S. alone,
Hermès has more than 20 boutiques and not every luxury brand can do this at a time
where people’s spending ability is low, and at a time where luxury brands have become
more aggressive in capturing the market’s attention.
A truly revered name in high fashion world, Hermès has carved its name and logo in
the fashion industry. No other brand can come close with its rich history. Hermès sales
are made up of 30 % leather goods, 15 % clothes, 12 % scarves and 15% ties.
Hermès clientele include the world’s biggest celebrities such as Paris Hilton, Nicole
Kidman, Julianne Moore, Elle MacPherson, Elizabeth Hurley and Madonna.
In 2012, the Hermès group reported revenue of €3,484.1m, a rise of 22.6% at current
exchange rates and of 16.4% at constant exchange rates. Sales exceeded the target
for the year, driven by persistently robust momentum in the fourth quarter (+18.5% at
constant exchange rates). Sales generated by the groups own stores advanced by
23% at current exchange rates and by 16% at constant exchange rates. In 2012
Hermès opened two new branches and renovated or enlarged twelve others. Sales
were stimulated by non-Japan Asia (+25%).
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69. The network added two new branches in Taiwan and China and six other stores were
renovated or expanded. Japan (+7%) also contributed to this performance after a
relatively stable year in 2011.
Growth was impressive in Europe at 15%, with a positive contribution from nearly all
countries, and in the Americas (+14%), which is benefiting from the gradual extension
of its network. Lastly, sales to travellers continued to trend up sharply throughout the
world. In response to persistently strong demand, in 2012, Leather Goods and
Saddlery (+12%) opened two new workshops in France, in Charente and Isère.
The Ready-to-wear and Accessories division (+22%) benefited from the dynamism of
the latter and from its inspired ready-to-wear collections. In Silk and Textiles (+16%),
growth was fed by new formats and by the use of new colours and materials. For
Perfumes (+14%), 2012 was a very good year.
Terre d’Hermès joined the ranks of the great classics and two lines were enhanced by
new launches, Voyage d’Hermès Parfum and L’Ambre des Merveilles. In Watches
(+17%), sales growth continued to run high in 2012, evidencing the house's ability to
win over Haute Horlogerie clients. Other Hermès sectors (+45%) registered an
exceptional surge. Hermès jewellery was driven by the success of its creations and the
presentation of its second Haute Bijouterie collection.
In 2012, currency fluctuations generated a positive impact of € 178 million on sales.
Hermès International did not buy back any of its own shares during the fourth quarter.
At 31 December, it held 1 449 442 shares for a total of € 309 million, excluding shares
traded under the liquidity contract.
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70. RATIO ANALYSIS
Ratios are guides or shortcuts that are useful in evaluating the financial position of a
company and the operations of a company from scientific facts. It helps in comparison
of changes in static data from previous years to current year and with the comparison
of other companies as well. In accounting and financial management ratios are
regarded as the real test of earning capacity, financial soundness and operating
efficiency of business concern.
Importance of calculating ratios are:
1. Simplifies Accounting Figures
2. Measures Liquidity Position
3. Measures Long-term Solvency
4. Measures operational Efficiency
5. Measures Profitability
6. Facilities Inter-firm and Intra-firm comparisons
7. Trend Analysis
55

71. Current Ratio
2009 2010 2011 2012
2.43 2.50 2.41 2.33
Some of the ratios are as follows:
1. Liquidity Analysis Ratio
2.20
2.30
2.40
2.50
2.60
2009 2010 2011 2012
2.43
2.50
2.41
2.33
Current Ratio
Analysis: Ratios are more than the ideal ratio i.e. 2:1 and therefore the short-term
financial position of the company is sound and the company will be able to pay its
current liabilities.
Quick Ratio
2009 2010 2011 2012
1.49 1.75 1.72 1.39
0.00
1.00
2.00
2009 2010 2011 2012
1.49 1.75 1.72 1.39
Quick Ratio
Analysis: Short-term Liquidity is an area of concern as its having excess Short-term
Liquidity. They should try to reduce the quick assets.
56

72. 2. Leverage Analysis Ratio
Debt Equity Ratio
2009 2010 2011 2012
0.04 0.02 0.02 0.02
0.04
0.02 0.02 0.02
0.00
0.01
0.02
0.03
0.04
2009 2010 2011 2012
Debt Equity Ratio
Analysis: Low Financial risk as ratio is near to zero. It provides sufficient protection to the
long-term lenders. Long-term financial position of the company is sound.
Times Interest Earned
2009 2010 2011 2012
36.45 53.46 N/A 60.14
36.45
53.46
-71.39
60.14
-100.00
-50.00
0.00
50.00
100.00
2009 2010 2011 2012
Times Interest Earned
Analysis: Low financial risk as the ratio is more than 10 times which means that
protection is available to the creditors for the payment of interest on long term loans.
57

73. Debt Asset Ratio
2009 2010 2011 2012
0.027 0.015 0.012 0.011
0.000
0.010
0.020
0.030
2009 2010 2011 2012
0.027 0.015 0.012 0.011
Debt Asset Ratio
Analysis: Low Financial risk as ratio is near to zero. It shows that lower debts are used to
finance the assets which indicates sound financial position of the company.
58

74. 3. Profitability Analysis Ratio
Gross Profit Ratio
2009 2010 2011 2012
63% 66% 69% 68%
Analysis: Marginal increase in the direct efficiency which is a good indicator of high
profits.
Net Profit Ratio
2009 2010 2011 2012
15% 18% 21% 22%
0%
10%
20%
30%
2009 2010 2011 2012
15% 18% 21% 22%
Net Profit Ratio
2009 2010 2011 2012
63%
66%
69% 68%
Gross Profit Ratio
Analysis: Steady increase in the overall efficiency and profitability of the business.
59

75. Return on Assets (ROA)
2009 2010 2011 2012
12% 15% 19% 22%
12%
15%
19%
22%
Return on Assets (ROA)
2009 2010 2011 2012
Analysis: Impressive increase in the Asset utilization.
Return on Equity (ROE)
2009 2010 2011 2012
16% 20% 26% 32%
0%
10%
20%
30%
40%
2009 2010 2011 2012
16%
20%
26%
32%
Return on Equity (ROE)
Analysis: Steady increase in returns to the shareholders which indicates sound financial
position of the company. They are providing excellent returns on the shareholders fund.
60

76. 4. Turnover Ratio
Stock Turnover Ratio
2009 2010 2011 2012
1.44 1.74 1.66 1.53
0.00
0.50
1.00
1.50
2.00
2009 2010 2011 2012
1.44 1.74 1.66 1.53
Stock Turnover Ratio
Analysis: Low inventory turn which indicates inefficient inventory management. It
indicates that inventory did not sell very fast and remained in the store for long time. This
is happening because of low sales.
Account Receivable Turnover
2009 2010 2011 2012
14.47 15.10 16.17 16.82
Analysis: Turnover more than 10 times indicates efficient management. It shows that the
amount from debtors is being collected more quickly.
13.00
14.00
15.00
16.00
17.00
2009 2010 2011 2012
14.47 15.10 16.17 16.82
Account Receivable Turnover
61

77. 5. Growth Ratios
Sales Growth Ratio
2010 2011 2012
25% 18% 23%
Net Profit Growth Ratio
2010 2011 2012
47% 40% 24%
0%
20%
40%
60%
2010 2011 2012
25% 18% 23%
47% 40% 24%
Growth Ratios
Sales Growth Ratio Net Profit Growth Ratio
Analysis: There is a moderate growth in sales and there is good growth in profits.
62

78. S.No. Ratios 2009 2010 2011 2012
1 Gross Profit Margin 54.41% 58.23% 58.62% 58.29%
2 Net Profit Margin 8.09% 9.63% 10.03% 9.93%
3
Inventory Turnover
Ratio
4.36 4.13 3.34 3.40
4 Current Ratio 3.05 3.05 2.98 3.06
5 Debt Ratio 0.10 0.07 0.07 0.06
RALPH LAUREN
63

79. HERMÈS
RISK MANAGEMENT
Limiting Industrial Risks and Protecting the Environment
The Group Industrial Department implements and coordinates the initiatives designed
to protect our manufacturing assets, our employees and the environment on all Hermès
production sites. It relies on the industrial departments in the métiers and on-site
directors to have internal diagnostics or audits carried out by specialised third parties
and to prepare operational improvement plans. The recommendations resulting from
these analyses in the areas of organisation, procedures, expenditure or investments
are subject to regular follow-up. Safety-related expenditure and investments are
considered to be a priority when making budget choices.
Protecting Assets Through a Prudent Insurance Programme
The group holds policies from leading insurers to provide property, operating loss and
civil liability cover. In addition to this insurance cover, Hermès has adopted an active
risk prevention policy and carefully follows up on recommendations issued by the
insurers.
Compliance With Applicable Laws In All Areas
The group keeps abreast of changes in legislation and case law in all relevant areas to
ensure that it complies with French and foreign laws and regulations. It uses in-house
resources and outside firms for its legal and regulatory monitoring.
64

80. Due to the ever-increasing complexity of all legal matters, our in-house Legal
Department is organised into skill centres dedicated to the main branches of law that
principally concern us: intellectual property, corporate/securities law, property law, and
business law (contracts of all kinds, competition, distribution, consumption). Labour and
tax matters are respectively handled by the Group Human Resources Department and
Group Tax Department, which work in conjunction with the Legal Department if
necessary. In addition, in each region where the group operates, Hermès uses leading
local independent law firms that specialise in the many areas covered. While the group
is involved in ongoing litigation, there are no pending settlements that are expected to
produce a material impact on its business or on its financial results. The company is
not aware of any other pending or potential governmental, legal or arbitration
proceedings that may have, or that over the last twelve months have had, a material
impact on its financial condition or profitability and/or on the financial condition or
profitability of the group.
65

81. CONCLUSION
Chanel has many strengths that makes it the multi-billion company strongly established
within the elusive designer and haute couture market. It will retain the powerful
marketing positioning by continuing the excellent job it is doing. Tapping into new
market of home décor will make the brand more desirable. To prepare for an even
brighter future ahead, Chanel should consider investing into emerging market by
opening more stores abroad. Chanel’s success is truly a result of the house’s decision
to remain true to Chanel, always creating a classic timeless elegant style.
“Fashion fades, but style remains.”
66

83. “An interior is the natural projection of the soul.”

85. BIBLIOGRAPHY
1. Décor goes couture (2012):
http://www.thehindubusinessline.com/features/smartbuy/luxury-and-fashion/decor-
goes-couture/article4213533.ece
2. Chanel Company Profile: http://biz.yahoo.com/ic/93/93472.html
3. Chanel Story: https://plus.google.com/+CHANEL/about
4. Business Philosophy and Business Strategies used: http://fashions-
chanel.blogspot.in/2011/11/business-philosophy-business-strategies.html
5. Luxury Brands Embrace Home (2013):
http://www.luxuryportfolio.com/blog/2013/08/09/Luxury-Brands-Embrace-Home
6. Coco Chanel's Many Inspirations (2009):
http://itsthestylefile.com/2009/09/20/coco-chanels-many-inspirations/
7. Wallpaper: http://en.wikipedia.org/wiki/Wallpaper
8. Using wallpaper: http://www.doityourself.com/stry/wallpapercharacter
9. Hermès (2013): http://www.therichest.com/expensive-lifestyle/fashion/hermes-the-
175-year-old-french-fashion-empire/
10. Hermès Financial Information: http://finance.hermes.com/en/Reports-and-
Presentations/Annual-reports
70

86. 11. Ralph Lauren Investor Relation:
http://investor.ralphlauren.com/phoenix.zhtml?c=65933&p=irol-irhome
12. Gabrielle ‘Coco’ Chanel (2008): http://www.entrepreneur.com/article/197624
13. Chanel’s Brand Strategies Analysis Report (2010):
http://issuu.com/teojiaen/docs/teo_jia_en_chanel_brand_strategies_analysis
14. Karl Lagerfeld:
http://www.style.com/fashionshows/designerdirectory/CHANEL/seasons/
15. Keira vs Audrey as Coco Chanel (2013):
http://www.graziadaily.co.uk/fashion/news/karl-lagerfeld-bats-keira-knightley-over-
audrey-tautou-for-coco-chanel
16. Keira Knightley is the new face of Coco Mademoiselle:
http://allwomenstalk.com/keira-knightley-is-the-new-face-of-coco-mademoiselle
17. Project Chanel (2013): http://www.retail-focus.co.uk/projects/911-project-chanel
18. Merchandising Techniques in Luxury Retail:
http://smallbusiness.chron.com/merchandising-techniques-luxury-retail-18464.html
71

87. LIST OF FIGURES
Gabrielle ‘Coco’ Chanel, 1936Chanel Ad Campaign
Living Room
31 Rue Cambon - Coco Chanel Apartment 31 Rue Cambon
72
Coco Chanel creating new designs

88. Coco Chanel’s favourite flower –
Concept for a Wallpaper
Camellia Flower
Karl Lagerfeld Keira Knightley as the face of
LIVING WITH CHANEL
73
Concept for a Decal
Star inspired jewelry by Chanel

89. VM Manufacturing Details
Coco Chanel Sketch Coco Chanel in her apartment, 1937
74
Visual Merchandising
Concept Model for
Chanel Store to be opened in Paris
Keira Knightley in a
Chanel Ad Campaign

90. ANNEXURE
HERMÈS
CONSOLIDATED STATEMENT OF INCOME
Particulars (in millions of euros) 2009 2010 2011 2012
Revenue 1914.3 2400.8 2,841.20 3,484.10
Cost of sales -701.7 -815.0 -886.4 -1,110.80
Gross profit 1212.6 1585.8 1,954.80 2,373.30
Selling, marketing and administrative expenses -660.6 -802.2 -945.7 -1,130.80
Other income and expense -89.1 -115.4 -123.9 -123.8
Recurring operating income 462.9 668.2 885.20 1,118.60
Other non-recurring income and expense - - - -
Operating income 462.9 668.2 885.20 1,118.60
Net financial income -12.7 -12.5 12.4 -18.6
Pre-tax income 450.2 655.7 897.70 1,100.00
Income tax expense -148.2 -220.9 -289.8 -349.1
Net income from associates -6.5 -3.1 -4.5 -0.4
Consolidated net income 294.5 431.7 603.40 750.50
Net income attributable to non-controlling
interests -6.7 -10.0 -9.2 -10.6
Net inco me attributable to owners of the
parent 288.8 421.7 594.30 739.90
Earnings per share (in euros) 2.75 4.01 5.68 7.11
Diluted earnings per share (in euros) 2.74 4.00 5.66 7.07
75

91. CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Particulars (in millions of euros) 2009 2010 2011 2012
Consolidated net income 295.4 431.7 603.40 750.50
Actuarial gains and losses -9.9 -8.9 -3 -30.5
Foreign currency adjustments -5.5 75.9 24.4 -20.8
Derivatives included in equity 37.3 -25.3 -35.4 86.6
Gain/(loss) on sale of treasury shares -0.3 2.00 -11.4 1.3
Income tax relating to components of other
comprehensive income -8.7 11.8 12.5 -20.9
Comprehensive income 308.4 487.1 590.50 766.10
Attributable to owners of the parent 301.6 475.2 581.3 755.3
Attributable to non-controlling interests 6.8 11.8 9.2 10.8
*Number Of Shares as at 31st December
2009 2010 2011 2012
1055,69,412 1055,69,412 1055,69,412 1055,69,412
*Share Price as at 31st December
2009 2010 2011 2012
€ 93.31 € 156.75 € 230.35 € 226.30
76

92. HERMÈS
CONSOLIDATED STATEMENT OF FINANCIAL POS ITION
ASSETS
Particulars (in millions of euros) 2009 2010 2011 2012
Non-current assets 1175.6 1354.8 1,377.10 1,603.00
Goodwill 34.8 37.2 38.7 79.3
Intangible assets 61.2 75.2 96.7 101.6
Property, plant & equipment 685.1 774.2 869.4
Investment property 95.3 98.3 98.8 98.3
Financial assets 118.6 151.7 29.8 28.5
Investments in associates 15.0 14.3 12.9 25.8
Loans and deposits 21.0 24.3 35 42.9
Deferred tax assets 143.1 178.1 194.2 217.8
Other non-current assets 1.6 1.5 1.7 1.3
Current assets 1264.9 1563.8 1,871.30 1,802.80
Inventories and word-in-progress 485.8 468.6 534.5 726.9
Trade and other receivables 132.3 159.0 175.7 207.1
Current tax receivables 3.5 1.1 0.8 0.8
Other current assets 55.6 69.5 94.4 116.6
Fair value of financial instruments 58.2 21.7 17.7 54.4
Cash and cash equivalents 529.5 843.8 1,048.20 697
TOTAL ASSETS 2440.5 2918.6 3,248.40 3,405.80
77

93. EQUITY & LIABILITIES BEFORE APPROPRIATION
Particulars (in millions of euros) 2009 2010 2011 2012
Equity 1803.9 2163.2 2,325.50 2,325.50
Share capital 53.8 53.8 53.8 53.8
Share premium 49.6 49.6 49.6 49.6
Treasury shares -32.5 -33.0 -304.1 -304.1
Reserves 1451.6 1621.3 1,881.20 1,881.20
Foreign currency adjustments -31.4 42.7 67.1 67.1
Derivatives included in equity 10.0 -5.9 -29.1 -29.1
Net income attributable to owners of the parent 288.8 421.7 594.3 594.3
Non-controlling interests 14.0 12.9 12.7 12.7
Non-current liabilities 115.4 130.8 147.60 147.60
Borrowings and debt 19.4 17.9 18.4 18.4
Provisions 7.5 14.4 14.5 14.5
Post-employment and other employee benefit
obligations 54.6 56.3 60.8 60.8
Deferred tax liabilities 10.0 12.1 17.5 17.5
Other non-current liabilities 23.9 30.1 36.4 36.4
Current liabilities 521.2 624.6 775.30 775.30
Borrowings and debt 45.4 26.0 20.5 20.5
Provisions 13.8 31.0 28.8 28.8
Post-employment and other employee benefit
obligations 4.2 6.2 6.2 6.2
Trade and other payables 198.3 234.6 299.7 299.7
Fair value of financial instruments 36.8 30.1 58.3 58.3
Current tax liabilities 39.4 76.3 89.9 89.9
Other current liabilities 183.3 220.3 271.9 271.9
TOTAL EQUITY AND LIABILITIES 2440.5 2918.6 3,248.40 3,248.40
*Dividends Paid(in millions of euros)
2009 2010 2011 2012
-116.2 -119.1 -167.3 -742.3
78

94. Ralph Lauren Corporation
Annual Income Statement
Particulars (In millions of USD) 2009 2010 2011 2012
Total Revenue 5,018.90 4,978.90 5,660.30 6,859.50
Cost of Revenue, Total 2,288.20 2,079.80 2,342.00 2,861.40
Gross Profit 2,730.70 2,899.10 3,318.30 3,998.10
Depreciation 164.2 159.5 168.7 196.3
Amortization of Intangibles 20.2 21.7 25.4 28.9
Depreciation / Amortization 184.4 181.2 194.1 225.2
Restructuring Charge 23.6 6.9 2.6 12.4
Impairment-Assets Held for Use 55.4 6.6 2.5 2.2
Unusual Expense (Income) 79 13.5 5.1 14.6
Total Operating Expense 4,423.40 4,272.00 4,815.20 5,820.10
Operating Income 595.5 706.9 845.1 1,039.40
Interest Expense, Net Non-Operating -26.6 -22.2 -18.3 -24.5
Interest Income - Non-Operating 22 12.4 7.7 11
Investment Income - Non-Operating -3.4 -7.8 -9.1 -10.8
Interest / Investment Income, Non-Operating 18.6 4.6 -1.4 0.2
Interest Income (Expense), Net-Non-Operating,
Total
-8 -17.6 -19.7 -24.3
Net Income Before Taxes 587.5 689.3 825.4 1,015.10
Provision for Income Taxes 181.5 209.8 257.8 334.1
Net Income After Taxes 406 479.5 567.6 681
Minority Interest 0 0 -- --
Net Income Before Extraordinary Items 406 479.5 567.6 681
Net Income 406 479.5 567.6 681
Basic Weighted Average Shares 99.2 98.9 96 92.7
Basic EPS Excluding Extraordinary Items 4.09 4.85 5.91 7.35
Basic EPS Including Extraordinary Items 4.09 4.85 5.91 7.35
Diluted Net Income 406 479.5 567.6 681
Diluted Weighted Average Shares 101.3 101.3 98.7 95.5
Diluted EPS Excluding Extraordinary Items 4.01 4.73 5.75 7.13
Diluted EPS Including Extraordinary Items 4.01 4.73 5.75 7.13
DPS - Common Stock Primary Issue 0.2 0.3 0.5 0.8
Gross Dividends - Common Stock 19.8 29.7 47.6 74.4
Rental Expense, Supplemental 237 267 317 427
Advertising Expense, Supplemental 171 157 192 213
Equity in Affiliates, Supplemental -5 -5.6 -7.7 -9.3
79

95. Ralph Lauren Corporation
Annual Balance Sheet
ASSETS
Particulars (In millions of USD) 2009 2010 2011 2012
Cash and Short Term Investments 819.9 1,147.20 1,046.90 1,187.30
Total Receivables, Net 474.9 383.2 500.6 590.4
Inventories - Finished Goods 518 496.8 692.8 835.4
Inventories - Work In Progress 1.7 1.3 1.8 1.1
Inventories - Raw Materials 5.4 5.9 7.5 5.1
Total Inventory 525.1 504 702.1 841.6
Prepaid Expenses 108.6 101.1 125.8 108.9
Other Current Assets, Total 128.2 140.3 102.6 171.7
Total Current Assets 2,056.70 2,275.80 2,478.00 2,899.90
Property / Plant / Equipment, Total - Net 651.6 697.2 788.8 884.1
Goodwill, Net 966.4 986.6 1,016.30 1,004.00
Intangibles, Net 348.9 363.2 387.7 359
Other Long Term Assets 299 245.8 221.4 167
Total Assets 4,356.50 4,648.90 4,981.10 5,416.40
80

96. LIABILITIES
Particulars 2009 2010 2011 2012
Accounts Payable 165.9 149.8 141.3 180.6
Accrued Expenses 375.5 463.1 568.8 577.8
Notes Payable / Short Term Debt 0 0 0 0
Current Portion of Long Term
Debt / Capital Leases
-- -- -- 0
Dividends Payable -- -- -- 18.5
Other Current liabilities, Total 132.7 134.4 121.9 187.8
Total Current Liabilities 674.1 747.3 832 946.2
Long Term Debt 406.4 282.1 291.9 274.4
Capital Lease Obligations 38.4 38.2 40.4 38.3
Total Long Term Debt 444.8 320.3 332.3 312.7
Deferred Income Tax 154.8 156.5 197.8 203.2
Other Long Term Liabilities 347.7 308.2 314.3 301.8
Total Liabilities 1,621.40 1,532.30 1,676.40 1,763.90
Common Stock, Total 1.1 1.2 1.2 1.2
Additional Paid-In Capital 1,108.40 1,243.80 1,444.70 1,624.00
Retained Earnings (Accumulated Deficit) 2,465.50 2,915.30 3,435.30 4,042.40
Treasury Stock - Common -966.7 -1,197.70 -1,792.30 -2,211.70
Other Comprehensive Income 126.8 154 215.8 196.6
Other Equity 126.8 154 215.8 196.6
Total Equity 2,735.10 3,116.60 3,304.70 3,652.50
Total Liabilities & Shareholders' Equity 4,356.50 4,648.90 4,981.10 5,416.40
Shares Outstanding - Common Stock Primary Issue 55.9 56.1 63.7 61.9
Shares Outstanding - Common Issue 2 43.3 42.1 30.8 30.8
Total Common Shares Outstanding 99.2 98.2 94.5 92.7
Treasury Shares - Common Stock Primary Issue 16.4 19.6 25.8 29.2
Employees 17,000.00 19,000.00 24,000.00 25,000.00
Part-Time Employees -- -- -- --
Number of Common Shareholders 1,152.00 1,188.00 1,048.00 948
Quick Ratio 2.27 2.37 2.13 2.18
Current Ratio 3.05 3.05 2.98 3.06
Net Debt -375.1 -826.9 -714.6 -874.6
Tangible Book Value 1,419.80 1,766.80 1,900.70 2,289.50
Tangible Book Value per Share 14.31 17.99 20.11 24.7
81