Versace, the favoured brand of celebrities such as Elton John and Jennifer Lopez, is pulling out of Japan after nearly 30 years -- highlighting the depth of the consumer slump in one of the world's largest luxury markets.
Santo Versace, president of Versace, which announced store closures in Japan.
The Italian fashion house has closed all three directly owned shops in Japan and is expected to shut its Tokyo business office at the end of the month.
The company's retreat reflects Japan's diminishing role as a consumer of luxury goods such as diamond-studded watches and crocodile-skin handbags.
A spokeswoman for Versace said of the store closures: "Following the arrival of the new [chief executive] Giangiacomo Ferraris, the entire business strategy for Versace is under review. The Versace boutiques in Japan no longer represented the brand image and it was felt to be more advantageous for the company to close them and start with a clean slate in order to actively and aggressively pursue new locations and more suitable distribution channels."
This summer saw a change at the top of the Italian fashion house when it appointed Mr Ferraris from Jil Sander as chief executive after his predecessor, Giancarlo Di Risio, left following speculation of a rift between him and Donatella Versace, creative director.
Versace is not alone in suffering from the downturn in luxury spending in Japan.
Moët Hennessy Louis Vuitton, owner of some of the most popular brands in Japan, saw sales there plummet 20 per cent in the first half of the year.
In contrast, sales in the rest of Asia grew 4 per cent.
Asia, excluding Japan, contributed 24 per cent of LVMH's first-half revenues, or more than twice as much as Japan's 11 per cent.
The sluggish outlook for Japan forced LVMH to cancel plans to open its largest store in the Ginza district of Tokyo next year. Marni closed a store in the Marunouchi area after nearly five years while Chanel closed a boutique in the southwestern prefecture of Kyushu.
Amid a broad-based consumption slump that has led to persistent declines in department store and supermarket sales, sales of imported brands in Japan fell nearly 11 per cent last year to Y1,064bn, according to Yano Research, an independent market research group.
Department stores in Japan, which house many of the brands' boutiques, have suffered a sales decline for 18 consecutive months.
Sales at department stores in August dropped 8.8 per cent,
Yano estimates that Japan's market for imported brands has shrunk by about Y800bn ($9bn) since 1996 and forecasts it will decline further in the years ahead as younger people turn away from high-end branded luxury products.
© The Financial Times Limited 2009