NEW YORK, Jul 24, 2002/ --- Less than the three years after moving into its 21,000-square-foot Rockefeller Center flagship, Sephora is giving up the lease, further fueling already rampant rumors about the poor health of this LVMH division.

Another French brand, Faconnable, is set to take over the three floors of prime Manhattan retail space.

Sephora USA President and CEO David Suliteanu insists, however, that the much-hyped megastore's closure is far from a death knell for the retailer.

"Sephora continues to achieve outstanding sales growth across the United States, and while Rockefeller Center has been a very visible store, it did not meet our operating targets," he said in a statement Tuesday.

"We remain on track to achieve our near-term objective of positive operating profit and cash flow in 2003."

Sephora still has 71 U.S. stores, with six in New York once the Rockefeller Center flagship is shuttered on August 31.

Sephora Europe operates more than 400 stores.

Late last year Sephora announced plans to close its network of five stores in Germany, just one week after confirming that it was shutting its seven shops in Japan.

LVMH bought Sephora in 1997, but hasn't yet seen the hefty profits it had anticipated.

Bernard Arnault has hinted at a sell-off in the past, describing the luxury conglomerate's loss-making retail division - which also includes duty-free shops and La Samaritaine -- as "non-core."

Nordstrom subsidiary Faconnable, based in Nice, will move into the Rockefeller Center space at Fifth Avenue and 54th Street in September 2003.

It assumes the lease on January 15, and will then begin about eight months of construction.

The Sephora store had been criticized for being too difficult to navigate, and had undergone two redesigns since its October 1999 opening.

Faconnable currently has a 10,000-square-foot boutique (only 3,000 is selling space) on Fifth Avenue, which opened in 1993 as the brand's first U.S. boutique.

Until then, Faconnable was sold in the U.S. only at Nordstrom.

"We couldn't be more excited about this move," said Mark Brashear, president of Faconnable.

"Rockefeller Center is one of the most prominent retail destinations in the city, and the increased space at this prime location will allow us to present the most complete and compelling selection of Faconnable."

The brand's current Fifth Avenue outpost stocks a substantial men's collection, and limited selection of women's pieces.

The vast new Rockefeller Center store will house its entire women's and accessories collections.

Faconnable currently has free-standing boutiques in Beverly Hills and Costa Mesa, California, and in Dallas.

A new store will open at the Village of Merrick Park in Coral Gables, Florida on September 27. The brand also operates 23 international boutiques, primarily in Europe.