Habitat is axing its Croydon branch following a review of its European store portfolio.
The retailer wants to standardise store sizes at approximately 1,400 sq m - half the size of the Purley Way outlet.
A spokeswoman said: 'We do not have plans to downsize any other stores at the moment.'
Two new store openings are planned this year, one in the UK and one in France, bringing the store total to 79.
Habitat UK made a net loss of£8.4 million on sales of£121.7 million in the year to March last year.