French fashion powerhouse Chanel has withdrawn its cosmetics and fragrances shops from the duty-free stores at the Incheon International Airport after negotiations over the store space fell through, its local branch office said Thursday.

Chanel Korea had negotiated with Lotte Duty Free and Hotel Shilla, South Korea's top two duty-free operators, to renew its contract for cosmetic sales at the nation's main gateway, but failed to reach an agreement. It closed three cosmetic shops within the duty-free stores on Aug. 31.

"Withdrawing from the duty-free stores doesn't mean that we terminated the cosmetic business there. If we can reach an agreement (with the duty-free stores), Chanel Korea could reconsider the matter in the future," a spokesperson for Chanel Korea said. 

Chanel Korea declined to elaborate on the specific reason for the withdrawal and duty-free sales figures, citing its company policy.

The duty-free business division at the nation's main gateway said the deal broke down because Chanel's demand for a separate space for its cosmetic lines was not met.

"We couldn't reach an agreement with Chanel because it wanted a separate space for its own brand shop in the airport, which was not feasible given the current circumstances," an airport official said, asking for anonymity. (Yonhap)