French luxury fashion house Chanel has closed its boutique within a Seoul department store, citing operational disruptions caused by Italian rival Gucci.

"Chanel has decided to close its boutique in the Galleria Department Store Luxury Hall starting Wednesday due to the department store's plan to set up a pop-up store, which adversely affects our store's visibility and operational environment," said Chanel in a statement released Thursday.

According to industry sources, the site designated for the pop-up store, located in front of Chanel’s boutique, was previously occupied by other luxury brands and has now been allocated to Gucci for the upcoming event.

"The establishment of such a pop-up store, which undermines our business environment, is evidently a breach of contract," the statement continued.

Galleria Department Store, located in the posh shopping district of Apgujeong-dong in southern Seoul, was one of the first department stores here to specialize in housing a number of luxury boutiques under its roof. The Apgujeong branch is led by luxury goods sales, and posted 1.14 trillion won ($854.6 million) in sales last year.

A Galleria official expressed its embarrassment regarding Chanel’s abrupt closure.

"Before launching the pop-up store, we communicated with Chanel and the other brand operating the pop-up. Although there were different views on the matter, we were working to narrow our differences," the official added.

The official declined to elaborate further but acknowledged that “It’s rare for a brand to cease operations due to communication issues with the department store.”

Regarding possible resumption of the closed boutique, Chanel stated that it would restart operations when it deems the situation conducive to providing the best customer experiences. For refunds and exchanges, the firm plans to direct customers to its nearby outlet in Cheongdam-dong.

“We regret that Galleria, a department store with a 25-year relationship with Chanel, has made a decision detrimental to our partnership," Chanel's statement read.

Meanwhile, Galleria plans to continue with the scheduled Gucci pop-up store, which is set to open on March 1 and run until March 15.