The Postie store in Nelson is closing but its Richmond shop will remain open.
The Bridge St store will close on Wednesday with all seven staff losing their jobs.
Company chief executive Richard Binns said: "Unfortunately we came to the end of the lease with our Nelson store and it's not making any money for us.
"The site is too big and we looked at relocating to another site in Nelson but we could not make it work for us.
"We're not happy about the decision to close but it is the harsh economics of retailing."
The national clothing retailer is selling its school uniform business Schooltex to the Warehouse for $9 million with the sale being completed on February 28. Schooltex supplies uniforms and sportswear to more than 1100 schools.
Mr Binns said that move had no influence on the Nelson closure decision which was purely based on the lease renewal and options to downsize.
The company had been unable to find other roles for the Nelson staff, Mr Binns said.
He said it was not excluding returning to Nelson, and it was an option for the future.
The company has 81 other Postie stores which would continue to focus on women's, men's and children's clothing, and health and beauty products.
Mr Binns described retailing conditions as challenging.
"We are happy with the performance of the business but retailers have to be on their game all the time."
The Postie store in the Richmond Mall remains open.
- The Nelson Mail
Does Nelson deserve to be classed as a city?Related story: (See story)