Iconic Arrowtown retail group Wallace & Gibbs will close two of its six stores, citing an ongoing hangover from the pandemic years.

The family-owned group will shut its Buckingham Street fashion stores Wallace & Gibbs and IKON by mid-year, which have been operating for 30 and 18 years respectively.

Director Delvine Wallace said the businesses remained profitable.

"The ongoing hangover from Covid-19 with supply chain and staff recruitment issues, increased business costs, significant changes to shoppers' habits, and online shopping pressure is a sign of the times," Wallace said.

"With both store leases up this July, we saw it as opportune to close that chapter and put renewed energy and vigour into our other tourism and fashion enterprises."

It had been a great run with the businesses and it felt like the right time to let them go despite mixed emotions, she said.

Their daughters had grown up in the businesses from learning the ropes to taking management roles.

One of them, Caroline Walak, said it felt like the end of an era and it would be difficult to say goodbye.

"But we are very grateful for what we have accomplished and celebrate what has been an exciting journey together."

The other Wallace & Gibbs group stores will remain open.

It comes a day after luxury label Kate Sylvester called it quits after 31 years in the fashion business, as retailers struggle with high costs and low profits.

Main image (RNZ/Instagram/wallaceandgibbs): The business has pointed to staff recruitment issues, increased business costs and significant changes to shoppers' habits.