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Chanel Korea Accused Of Cutting Payroll Even With Huge Profits

By March 4, 2017 at 4:11 am
Chanel Korea witnessed mass resignations due to restructuring (Photo : Jason Merritt/Getty Images for Chanel)

Several employees of Chanel Korea have resigned which may have been caused by a large-scale restructuring implemented by the company last year. The luxury brand has enjoyed immense popularity in South Korea but is accused of not taking proper care of its employees.

On Friday, Chanel Korea carried out massive changes in its structure last year. This is said to have caused a lot of employees from its marketing and sales departments to resign.

It was said that the Korean branch of the brand integrated the department store and duty-free divisions into a single unit. Chanel admitted that it was designed to keep up with the rapid changes in the business environment.

"This integration impacted very few positions," a spokesperson for Chanel Korea said. "As a responsible employer, we supported the people with the highest standards following our usual social policy."

The spokesperson denied that there will be additional restructuring. However, experts from the industry believe that another large-scale change will take place this year. There are speculations that employees in finance and personnel divisions will most possibly be the next targets.

Moreover, the payroll cut, which was part of the restructuring, was not caused by Chanel Korea's failing sales. In fact, over the recent years, the branch has gained increases in sales at major department stores. Last year, it witnessed a double-digit growth.

Chanel Korea has also continued to raise the prices of their products as well. It increased the prices of its cosmetic products by 3 percent last year. This year, it raised prices at 5 percent at duty-free shops and department stores.

Analysts claimed that the restructuring of Chanel Korea could have been caused by the brand's decline in terms of global sales. It was noted that Chanel's global head office has suffered plummeting sales and profits since 2015.

The brand has been criticized for caring only about profitability. Specifically, this brought to light the issue of payroll cuts even when it enjoyed huge profits in South Korea.

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