Barneys, the iconic American department store, is set to fall into Japanese hands after Fast Retailing delivered a possible knock-out blow to rival bidder Istithmar, the Dubai government-owned fund, by upping its offer to $950 million (£465 million).

Fast Retailing Co, which owns Uniqlo, the cut price clothes retailer, had bid $900 million for the 84-year old high fashion shop, which was then matched this weekend by Istithmar. The Dubai fund started the race to buy Barneys in June when it put $825 million on the table.

Istithmar now has just two days to match or better the rival offer to meet a deadline set by Barneys owners Jones Apparel Group.

Jones Apparel will have to pay Istithmar a $22.7 million break-fee if it accepts Fast Retailing Co.'s offer. The deal will give Jones Apparel a 57.8 per cent return in three years on its original investment of $400 million when it bought Barneys in 2004.

The store recently began selling Top Shop clothes, including a collection designed by Kate Moss, the British model.

Topshop, owned by Sir Philip Green as part of his Arcadia Group of companies, is planning to expand its presence in the North American market just as the business is set to lose its second key executive in less than a year.

Karyn Fenn, joint managing director at Topshop, is expected to announce her resignation this week following the departure of Jane Shepherdson, a hugely influential figure in fashion, last October.

Mary Homer, co-joint managing director, will take sole charge of managing the day-to-day running of Top Shop alongside Sir Philip.

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