Apax, the London-based private equity group, blamed market turmoil yesterday as it scrapped the $4 billion (£2 billion) float of Tommy Hilfiger, the fashion label.

A day before Fred Gehring, the Tommy Hilfiger chief executive, was due to begin an investor roadshow, Apax said the current volatility made it impossible to proceed. The Times has learnt that Apax planned to sell a 25 per cent stake through the listing on Euronext in Amsterdam, where Tommy Hilfiger has its headquarters.

Apax would have retained a 50 per cent share with senior management, staff and other private investors holding the balance.

A source close to the initial public offering (IPO) process said: “Since the time Apax began to talk to banks and do the marketing for the float, the equity markets have disappeared. It is incredibly volatile out there. Fund managers are reluctant to buy anything at this point so it is very hard to have price conversations with them.”

The decision sparked fresh concerns that the consumer slowdown caused by the credit crunch has spread to the upmarket fashion and luxury goods market.

Coach, the largest US maker of luxury handbags, reported its weakest profits growth for eight years on Wednesday, while Richemont, home to the Cartier and Montblanc brands, said demand was slowing.

Burberry, the UK label, this month said it may miss profit targets after poor sales in Spain.

One analyst said she feared UK and European brands could be hit by falling demand in Asia.

John Ayton, a partner at Bremont, the UK luxury watchmaker, said he was worried companies would suffer as jewellers and department stores cut back on orders.

In a joint statement, Apax and Tommy Hilfiger management insisted the business was trading strongly. It is understood that like-for-like sales were up in each of its core regions around the world, including the US.

The statement said: “Tommy Hilfiger has a very strong business and has been performing well. An initial public offering has always been recognised as a logical step. Investor feedback has been positive. However, considering recent volatile market conditions, management and shareholders have decided to postpone an IPO process until such time that market conditions have stabilised.”

Spokesmen for both Prada and Salvatore Ferrgamo, two luxury labels also understood to be planning IPOs, were unavailable for comment. Prada pulled a planned float after the September 11, 2001, terrorist attacks.

Tommy Hilfiger launched his first men's clothing collection in 1984. Apax bought the label three years ago for $1.6 billion but the 56-year-old founder retained a minority stake and the role of principal designer. At the time the label had seen its US profits halve in five years.

Insiders said that Apax had no timescale for when it may return to the market with the business. The bankers on the float, Credit Suisse, Morgan Stanley and Fortis, had been so confident of the potential demand from investors before Christmas that they suggested Apax sell all if its holding.

Apax is expected to refocus its attention on buying up Tommy Hilfiger licencees around the world and continuing its overhaul of the business alongside its founder. Under Apax, Tommy Hilfiger has moved away from street fashion and into “modern classic” clothing. The logos and garish colours have gone and been replaced by pearl-encrusted cocktail dresses and tweed tuxedos.

Mr Hilfiger has said: “We are going more upscale, more sophisticated.”

A Paris-based analyst said it was no surprise that Apax had pulled the float but added investors would also have been concerned about its exposure to the US market.

She said: “Tommy Hilfiger is still largely dependent on the US and, given what is happening to the US consumer, the appeal of the IPO would have been very limited. Perhaps the price would have been too low to be considered.”

She added: “So far, luxury companies in the UK and Europe have been relatively insulated from the slowdown given strong demand from Asia. What should worry brands here is what happens to Asian consumers if stock markets in the Far East continue to fall.”

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