John Lewis is to close its first store since 2006.
The retailer said the 35,000 sq ft Knight & Lee outlet in Southsea in Hampshire was its smallest full-range department store and could not easily be modernised.
John Lewis has previously acknowledged the "challenges" facing the High Street in the current retail climate.
However, it insisted it was not planning any other closures at the moment.
The store, which will close in July, is one of only two John Lewis shops in the UK to retain its original name.
The retailer said the size and condition of the building "restricts the customer offer".
Earlier this year, Sir Charlie Mayfield, chairman of the John Lewis Partnership, outlined the challenges facing shopkeepers: "Two main factors are affecting the retail sector - oversupply of physical space and relatively weak consumer demand."
He said full-year profits would be "substantially" lower this year and that staff, known as partners, might not be receiving an annual bonus this year, for the first time since 1953.
Other retailers have been harder hit by the downturn on the nation's High Streets.
Online giants such as Amazon have had a huge impact, as more consumers see online shopping as cheaper and easier than going to the shops.
The trade body for shops, the British Retail Consortium, said 2018 saw the worst Christmas for retailers in 10 years.
John Lewis actually saw a rise in Christmas sales year-on-year, but it has previously said that its profit margins are being squeezed by the need to match rivals' discounts.
Despite this, it has dismissed the suggestion that it should abandon its "never knowingly undersold" price pledge.
The Knight & Lee store opened in Southsea in 1865 and was acquired by the John Lewis Partnership in 1933.
It was closed on Wednesday for a staff meeting, when employees were told of the plans.
A statement from the company said it would require "significant investment" to modernise.
Dino Rocos, partner and operations director, said: "We have not taken this decision lightly and we considered every implication for our partners, customers and the community.
"However, a unique combination of factors, including the significant investment required and the opportunity to sell the property freehold, makes this the right decision for the financial sustainability of our business."
Portsmouth South MP Stephen Morgan said the closure would "rip the heart out" of Southsea.
In a letter to the company, Mr Morgan said the shop was a "well-loved asset" in the area.
"John Lewis is much cherished and causes a significant footfall which has a beneficial impact on the surrounding businesses and our local economy," he said.
The retailer said every effort would be made to find the 127 staff roles in nearby John Lewis and Waitrose stores.