Burberry has served its fragrance licensee InterParfums notice of its intention to terminate its agreement. Ending the deal will cost Burberry €181m (£141m).

The luxury retailer has been in talks with InterParfums, the worldwide licensee for Burberry fragrance and beauty products, since last December about developing a new model for that side of the business.

The discussions are ongoing but Burberry said the outcome was “uncertain” and it has served a notice to the French perfume firm to end the deal.

It said: “To maintain flexibility in pursuing its objective to develop fully this business in the future, Burberry has served notice of its intention to terminate the licence agreement with effect from December 31 2012.”