NEW YORK, United States — Big changes are coming to Chanel. As the company centralises its global operations in London, it's closing Chanel Ltd. in New York, BoF has learned. The change was announced internally this week.
This does not mean Chanel will be closing its US operations. Chanel, Inc. — which employs executives who oversee Chanel’s US business — will remain in its offices in the city.
However, New York will no longer serve as a global headquarters, and the majority of the global functions will now be based out of London. Andrea d’Avack, president of the Chanel foundation and corporate sustainability — who spent 16 years as the head of Chanel fragrance and beauty — has already moved to the UK after spending three years stateside.
But it's not only the US-based operations that are being reorganised. Richard Collasse, current president of Chanel's Japanese subsidiary, will be moving to Europe to work closely with the Wertheimer family — in particular, Alain Wertheimer, Chanel's chief executive. (BoF previously reported that Collasse would step down from his role in Japan in December 2018, but the exact details of Collasse’s move have yet to be announced and Chanel declined to comment on this).
In the nine years that American executive Maureen Chiquet was global CEO of the company, much of the strategic team was based in New York. Chiquet's dismissal in 2016 kicked off a major reorganisation, which culminated with the centralisation of global operations in London in the summer of 2017. According to an internal announcement made in July, Chanel's president of fashion, Bruno Pavlovsky, will assume a greater role in the company as president of Chanel SAS.
In his new role, Pavlovsky will serve as the connective tissue between the different product divisions. Pavlovsky, Anne Kirby, who was recently named president of fragrance and beauty, and Frédéric Grangié, the president of watches and fine jewellery, each report to Wertheimer.
In July, Chanel also revealed global financials for the first time in its 108-history, reporting that it generated nearly $10 billion in global sales in 2017. Many of these corporate shifts appear to be an effort to better compete with competitors like Gucci and Louis Vuitton, which are growing quickly online.
In a statement to BoF, a spokesperson for Chanel said that before centralising the business into a single UK holding company, functions were located in a number of different cities: "We wanted to simplify the structure of the business and London is the appropriate place to do that for an international company. London is the most central location to our markets, uses the English language and has strong corporate governance standards with its regulatory and legal requirements."
Several of Chanel's biggest competitors, including Kering and LVMH, also have executive functions based out of London, due to a variety of factors including favourable taxation, an international recruiting pool, easy transportation in-and-out of Europe, corporate-friendly policies and, for employees with families, a wider range of educational options than other European cities.
However, with Brexit looming, some of those advantages may begin to dissipate. For instance, several European Union countries now offer greater tax breaks to expats than the UK does. And some major companies are already choosing continental Europe over the UK. In March, consumer-package goods company Unilever announced that it chose Rotterdam in the Netherlands over London as the location for its main headquarters, with analysts citing tax breaks implemented by Mark Rutte and better protections against hostile corporate takeovers as reasons behind the decision.
As for Chanel, expect more announcements from the company in the coming months.