Swatch, which owns Omega, was hoping to open a flagship store at the former Racing Green site, a 7,000 sq ft (650 sq m) unit between 193 and 197 Regent Street.
Omega’s only UK standalone store is on Old Bond Street, although the brand is also sold in department stores and other jewellery retailers.
The retailer is also scrapping a deal to take a New York store, sources suggest. There is only one standalone store in the US – in Beverly Hills, California.
The Crown Estate, which owns the Regent Street store, is understood to be in talks with other interested retailers over the site and expects to secure yet another big-name tenant.
The watch retailer pulling out of the site is a rare setback for the world-famous shopping destination, which has attracted a string of high-profile retailers in recent months.
In February, H&M opened its new 32,295 sq ft (3,000 sq m) flagship, next door to the flagship Nokia store, which opened on the street the previous week. And, in less than a month’s time, Banana Republic will open its first UK store in a three-storey, 17,000 sq ft (1,580 sq m) site on the former Dickins & Jones site.
In addition, Retail Week revealed two weeks ago that LK Bennett plans to open a flagship store in the Talbots unit on the corner of Vigo Street.
Speciality Retail Group, which owns Racing Green, pulled the brand out of Regent Street as part of its recovery programme following a 7 per cent dip in profits in 2006.
Omega was unavailable for comment.