In a major shift for American fashion, Donna Karan, the 66-year-old founder and chief designer of Donna Karan International, a brand that defined the way American working women dressed for decades, announced that she was leaving the helm of the house that bears her name.

Karan will remain as an adviser to Donna Karan International, but devote more time to her Urban Zen line, which centres on wellness and artisanal goods, and its foundation.

LVMH Moet Hennessy Louis Vuitton, the French conglomerate that bought the house in 2001, said there were no immediate plans to replace her as a designer and the main Donna Karan collection would be suspended.

It will not hold a show at New York Fashion Week in September.

Instead, according to an announcement, the company will reorganise its teams and structure to "substantially increase its focus on the DKNY brand", the company's more accessible line, which is currently responsible for 80 per cent of Donna Karan International revenue. It will also maintain its licence business.

"It's a big corporate move and strategy statement," said Mr Robert Burke, founder of a namesake luxury consultancy and former fashion director of Bergdorf Goodman.

Karan said in a statement: "LVMH and I have made this decision after much soul-searching. I have arrived at a point in my life where I need to spend more time to pursue my Urban Zen commitment to its fullest potential and follow my vision of philanthropy and commerce."

Interestingly, Mr Ken Sunshine and the communications firm Sunshine Sachs were handling press requests for Karan on Tuesday. Although Mr Sunshine represents a number of top-drawer entertainment clients, including Karan's close friend Barbra Streisand, he is largely known for his work in crisis management and his aggressive representation of people in acrimonious situations.

Over the past year, there have been signs that the relationship between Karan and LVMH had deteriorated.

Last summer, Karan shuttered the three-storey, 11,000 sq ft space in Madison Avenue that for more than a decade had operated as her signature line's flagship store.

This winter, the Neapolitan menswear brand Isaia took over the lease.

In March, Karan gave an interview to Women's Wear Daily in which she seemed to acknowledge that all was not well with LVMH.

"I'm married to my company," Karan said. "I'll be married to my company whether I'm there or not there. I love the company, it's my baby. Am I still going to design there? I assume so."

The decision also reflects a reality of the New York fashion world, which has seen an explosion in the contemporary market in recent years thanks to brands such as Tory Burch, Alexander Wang and Rag & Bone.

In April, LVMH acknowledged the importance of the sector by naming the hot young designers Maxwell Osborne and Dao-Yi Chow of the haute streetwear brand Public School the creative directors of DKNY, to much fanfare.

At the time, Mr Pierre-Yves Roussel, chairman of the LVMH Fashion Group, said that LVMH "knows for a fact that most people who buy DKNY did not even know it was by Donna Karan".

The retirement of Karan's long- term right hand, Patti Cohen, in May led to speculation that Karan might also soon step down.

At a presentation later that month, Karan told a reporter: "Never say never."

In an e-mail, Streisand said that she was not worried about her friend.

"Donna is so great at everything she does... designs, friendships, compassionate causes. I'm sure her next steps will amaze us," she said.

Still, she added: "I surely will miss her clothes."

To a generation of women, Karan, who started her company in 1984 with "seven easy pieces", a mix-and-match wardrobe, was a personal heroine: a role model who understood their needs and solved their problems.

"Donna created a way of dressing that was womanly, practical and empowering, and came from a deeply personal, instinctual place; she has always let her empathetic heart rule her design head," said Anna Wintour, the artistic director of Conde Nast and editor of Vogue magazine.

Along with Calvin Klein and Ralph Lauren, Karan created one of the first truly global brands at New York Fashion Week, an achievement that brought her to the attention of LVMH, which paid US$243 million to acquire the brand.

It also earned her a Lifetime Achievement Award from the Council of Fashion Designers of America in 2004.

She has also received the womenswear designer of the year award and menswear designer of the year award.

"She came to the fore at a time when it was mainly men designing for women and she knew and understood her customers like no one else," Mr Burke said.

In the company's statement, Ms Caroline Brown, chief executive of Donna Karan International, said of the designer: "I speak for the many teams at DKI in supporting her great legacy and reinforcing our commitment to it for our next chapter."

New York Times