LVMH has broken off talks over opening a store in a building that was scheduled to be completed in 2010, an executive for the developer, Hulic, said Tuesday.
An LVMH spokesman said the company had withdrawn from the project but declined to explain the decision or comment on its plans.
"We have not been able to reach an agreement with Hulic on a store development project in Ginza," said Yuri Matsueda of Burson-Marsteller, a public relations agent for Louis Vuitton Japan.
Awash with cash from a global luxury boom, fashion and jewelry brands poured money into lavish retail spaces in districts like the Ginza and Omotesando over the past two years.
News reports this year referred to a 10-floor Louis Vuitton emporium and restaurant to rival opulent new Armani and Bulgari towers in the Ginza.
A weak yen also encouraged such investments, tempting wealthy Japanese consumers to shop at home rather than Europe, luring buyers from all over Asia to Tokyo and offering foreign brands bargains on real estate.
While luxury goods companies gave optimistic sales forecasts as recently as May, banking on the wealthy to keep spending despite the economic slowdown, the mood has turned sour as the impact from the global financial crisis has grown.
Japan, the United States and much of Western Europe is in recession, and growth is slowing in emerging markets like China.
Several luxury companies have cut their outlooks and expect a grim Christmas season followed by an even gloomier 2009.
LVMH had appeared to be weathering the downturn better than others. It said in October that sales had risen sharply in the first week of that month, and sales in emerging markets were holding up.
