The company - whose stores also include Dolcis and Bay Trading - said that the 17 Mandolin shops would either be 'transferred to other formats' or sold.
It added that further information, as well as a trading update, would be made available when it announces its interim results on October 16.
City analysts said that the move did not come as a 'big surprise'. Investec analyst Mark Charnock said: '[Mandolin] clearly got off to a poor start and our observations of the new ranges suggested only modest improvement.'
He added that the company would benefit from not having 'another big loss-maker on its hands' and that management would now be free to concentrate on problems in the group's larger businesses.
Seymour Pierce analyst Richard Ratner said that, as a result of the news, his firm had cut its pre-tax profit forecast for Alexon for the year from£12 million to£9.5 million and for 2007 from£17 million to£12.5 million.