French Connection is to close its stores in Japan and intends to hand the operation over to a licensee in a bid to stem haemorrhaging losses at the division.

In the next six to nine months the retailer intends to close all 21 shops in Japan – forecast to contribute losses of £2.5m over the year to January 31, 2010 – and the search has begun for a partner to operate the brand in the country.

The Japanese division of French Connection notched up interim losses of £1.7m in the first six months of this year.

French Connection chairman and chief executive Stephen Marks said: “I believe Japan continues to be an important market and presents a good opportunity in the future.”

Seymour Pierce analyst Freddie George was pleased the “reasonably dire” interim performance had “spurred management into action”. However, he retained his sell advice and expects a full-year loss of £15m.

The decision to shut the Japanese stores follows the news last month that French Connection would close its Northern European business.