Key financial figures include:
- Revenue: Declined to nearly €1,17 billion, compared to over €1,39 billion in 2022.
- Operating profit: Reduced substantially, down to approximately €44,93 million, compared to €299,65 million in 2022.
- Total assets: Contracted from €620,5 million to €461,9 million, reflecting strategic adjustments.
- Equity: Dropped sharply from €359,08 million to €81,49 million, largely due to a substantial decrease in retained earnings.
Operational Overhaul and Retail Model Adjustments
Balenciaga continued its business model transformation, including a revised logistics and financial flow structure. The company transferred its ready-to-wear and accessories distribution responsibilities in France to Balenciaga Opérations, a wholly owned subsidiary created in December 2021. This transition impacted revenue reporting and contributed to the brand’s lower top-line figures.
As part of this transformation:
- Balenciaga Opérations assumed full control over domestic retail and wholesale operations, enabling a more streamlined supply chain.
- The restructuring resulted in an internal reallocation of assets, with the transfer of inventory, logistics functions, and key personnel.
- The company also adjusted its financial reporting structure, impacting comparisons with prior-year figures.
Additionally, Arabian Luxury Goods Trading LLC, a new joint venture in the Middle East, was formed, with Balenciaga holding a 75% stake. This strategic move aims to strengthen the brand’s direct presence in the region.
Marketing and Brand Expansion
Despite financial setbacks, Balenciaga maintained a strong brand presence through high-profile campaigns and new ambassador partnerships. In 2023, the brand continued its collaborations with celebrities, leveraging social media traction to counterbalance negative publicity from past controversies.
In July 2023, Balenciaga appointed its first-ever brand ambassadors: acclaimed French actress Isabelle Huppert and Thai actor-singer PP Krit Amnuaydechkorn. This marked a significant move in the brand's history, aiming to strengthen its global appeal. Following this, in November 2023, the brand announced Michelle Yeoh as a global ambassador, further diversifying its representation. In December 2023, Nicole Kidman was introduced as a brand ambassador, adding to Balenciaga's roster of esteemed personalities.
In January 2024, Kim Kardashian officially became a Balenciaga ambassador. In a campaign photographed by Nadav Kander, she was transformed into a platinum blonde, donning a red wrap dress, black fur coat, and leopard-print stilettos, while carrying a €5.190 rodeo bag.
Additionally, Balenciaga sustained its emphasis on avant-garde and boundary-pushing fashion shows, reinforcing its brand identity. Balenciaga continued to push creative boundaries with its fashion presentations. In December 2023, the brand hosted a show on a closed-down street in Los Angeles, featuring guests like Kim Kardashian, Lil Wayne, and Nicole Kidman. The event also served as a soft launch for a collaboration with LA-based grocery store Erewhon, which included a capsule collection that quickly sold out and drove significant engagement on platforms like TikTok.
Financial Breakdown: Decline in Key Metrics
| Financial Metric |
2023 (€ million) |
2022 (€ million) |
Change (%) |
| Operating Income |
1.181,79 |
1.420,92 |
-16,82% |
| Revenue |
1.170,11 |
1.393,49 |
-16,03% |
| Total Assets |
461,91 |
620,52 |
-25,56% |
| Equity |
81,49 |
359,08 |
-77,30% |
Europe:
Balenciaga’s performance in Europe, particularly in France, was notably impacted by internal restructuring efforts. In 2023, the brand transferred its retail and wholesale operations in France to Balenciaga Opérations, a wholly owned subsidiary created to streamline distribution and logistics. As a result, a portion of revenue that was previously attributed to the main entity was redirected, contributing to a decline in reported European sales.
Additionally, weaker consumer sentiment in key European luxury markets, including France, Italy, and Germany, led to reduced discretionary spending. Inflationary pressures and changing spending patterns among high-end consumers further dampened demand across Western European markets.
Asia-Pacific:
The Asia-Pacific region remained a strategic market for Balenciaga in 2023, yet performance was uneven. While China continued to be a major driver of demand, with recovering luxury sales in key cities such as Shanghai and Beijing, other markets in the region experienced fluctuating performance due to economic headwinds and geopolitical uncertainties.
Balenciaga’s retail presence in Asia, particularly in Japan, South Korea, and Southeast Asia, saw mixed results. The reopening of Hong Kong and increased tourism in Japan led to short-term boosts, but currency fluctuations and rising operational costs weighed on overall profitability. The brand continued to strengthen its presence in South Korea, a major luxury fashion hub, leveraging celebrity partnerships and strategic retail expansions.
Middle East:
Balenciaga demonstrated a clear commitment to expanding its presence in the Middle East, a region with growing demand for luxury fashion. In May 2023, the company formed Arabian Luxury Goods Trading LLC, a joint venture in partnership with a local distributor, in which Balenciaga holds a 75% stake.
This strategic move aims to provide greater control over retail operations in the Gulf region, particularly in Dubai, Riyadh, and Doha, where the luxury consumer base remains strong. The Middle East continues to be a high-growth luxury market, driven by high-net-worth consumers, tourism, and a strong appetite for high-end European brands.
Balenciaga's expansion strategy in the region aligns with the broader trend among luxury houses, which are increasingly focusing on direct operations in the GCC (Gulf Cooperation Council) markets to capture the growing demand for ultra-luxury products.
Sales Channels
Retail stores:
Physical retail remained the dominant sales channel for Balenciaga in 2023, with brick-and-mortar stores accounting for the majority of revenue. However, like-for-like sales softened, reflecting broader market trends, including changing consumer spending patterns, economic uncertainty, and shifts in luxury shopping behaviors.
The transition of retail operations in France to Balenciaga Opérations played a role in reported sales declines within European stores. Additionally, the brand’s presence in high-end shopping districts across major cities saw mixed results—with strong performances in select Asian markets, while European and North American locations faced moderate declines.
Key retail store trends:
- Strategic market expansions: The Middle East joint venture (Arabian Luxury Goods Trading LLC) positioned Balenciaga for greater direct control in high-growth Gulf markets.
- Investment in flagship locations: The brand continued to elevate the in-store luxury experience, reinforcing its avant-garde positioning through store design and experiential retail.
- Declining traffic in Western markets: North America and parts of Europe experienced weaker foot traffic, partially attributed to inflationary pressures and shifting spending habits.
E-commerce:
Balenciaga’s digital commerce segment saw modest growth in 2023, in line with broader shifts in post-pandemic consumer behavior. While online luxury shopping surged in 2020-2021, growth has since stabilised, with more customers returning to physical stores for high-end purchases.
- Direct-to-consumer (DTC) strategy: Balenciaga’s official website remains a key channel, but growth has been tempered by competition from multi-brand luxury e-tailers (e.g., Farfetch, Net-a-Porter, and MyTheresa).
- Omnichannel integration: The brand continued enhancing its digital infrastructure, focusing on seamless in-store and online shopping experiences.
- Social media and digital marketing: Balenciaga leveraged celebrity campaigns, influencer partnerships, and exclusive online drops to engage younger audiences.
- Lower conversion rates: While website traffic remained strong, the conversion rate did not see significant improvement, reflecting cautious consumer spending trends.
Strategic Outlook: Navigating Recovery
Balenciaga’s 2023 financial performance signals a critical period of transition. The brand is focused on optimising profitability, adjusting its distribution strategy, and rebuilding brand equity post-controversy. The joint ventures and operational shifts suggest a realignment towards more sustainable long-term growth.
Conclusion
While Balenciaga’s 2023 financial decline is notable, it aligns with a broader industry recalibration amidst economic uncertainty. The ongoing restructuring, retail strategy refinements, and regional expansion initiatives will be crucial to the brand’s recovery trajectory in 2024 and beyond.
Read the full Balenciaga report Here.
For a deeper dive into the financial performance of other top luxury brands, explore the
Prada SPA Q3 2024 Financial Report here,
Moncler S.p.A. H1 2024 Financial Report here, and
LVMH Moët Hennessy - Louis Vuitton Q1, Q2, and Q3 2024 Financial Report here.
Check out other financial analysis article here
Cover Image: Balenciaga Winter 2023 Campaign, courtesy success male model agency.