Louis Vuitton cancels Flagship Store in Tokyo

Louis Vuitton said this week that it was scrapping plans for the enormous flagship store in central Tokyo as the worldwide financial crisis dampens the  luxury goods market.

The French luxury brand had planned a 12-floor, 12,000 square-metre (130,000 square-foot) store off a major street in Tokyo's glitzy Ginza district that would rival in size its main shop in Paris.

Louis Vuitton counts on Japan as its most lucrative market with some estimates saying that a third of young Japanese women own handbags or other apparel from the retailer.

A spokeswoman for the local unit, LVJ Group KK, confirmed that an agreement on building the store was off.

Hulic Co., a Japanese real estate firm constructing the building, said it had been set to open in 2010 with Louis Vuitton selling goods throughout almost the entire complex.

"We understand the company cancelled the project due to its own conditions," said a Hulic spokesman. "We will construct the building as scheduled, inviting other tenant candidates."

The spokesman said the developer was not too concerned about filling the building space thanks to the location but declined to comment whether the company would seek compensation from the luxury handbag company.

French parent LVMH Moet Hennessy-Louis Vuitton said its Japanese sales fell seven percent on the year in the nine months ended September 30. The company last week announced it would cut prices in Japan.

Japan's Nomura Equity Research recently estimated that global sales of luxury brands would sink by four percent next year and another three percent in 2010.