Top high street retailer British Home Stores won't be coming back to Bradford - despite pledging to return when it closed its former store in 2005.
Bhs, owned by billionaire Philip Green's Storehouse Plc group, says it has carried out a "strategic review" of its future business plan and will not now be taking space in the new £340 million Broadway shopping centre.
The move could be seen as a blow to the long-awaited shops scheme but Australian developer Westfield says the Bhs decision could open up the way to satisfy other retailers who want larger stores in its complex.
Councillors and business leaders also urged people to take heart from the continuing commitment of other key retailers, including Marks & Spencer and Debenhams.
Councillor Andrew Mallinson, Bradford Council's executive member for regeneration, said he believed the loss of Bhs would not have a significant impact on the Broadway scheme.
He said: "This decision is not a reflection on Westfield, Bradford or the Broadway development.
"It's purely an internal decision by Bhs relating to a restructuring of its business profile, making sure it is on a secure footing for the future.
"I am still confident that the scheme will go ahead and that Westfield will be working towards securing additional retailers.
"This kind of thing is only to be expected from some retail quarters in the current global market. We tend to look at these things from a centralised point of view, just focusing on Bradford, but global events have had a significant impact on their decision."
Bhs was the first anchor store to commit to the project when it was originally conceived. It signed up to take 40,000 sq ft within a revised scheme after Westfield took over the project from Stratford-based Stannifer.
Having occupied a store in the former Broadway buildings, prior to their demolition in 2005, Bhs left Bradford because, it said, it could not find suitable temporary premises but the company said it wanted to return with a major store in the new development.
A BhS spokesman said last night: "We have had a review this year of strategic planning and have decided we are going to pull out of the Bradford one."
The spokesman refused to comment further on the policies emerging from its recent review of strategic planning but last year it announced it was aiming to launch the chain in India, with stores in Delhi and Mumbai.
A Westfield spokesman said the decision could benefit other retailers which wanted to move into Broadway.
He said: "For some time now, we have been looking at configuring the retailer units to enable us to satisfy the requirements of some retailers interested in having a larger store within the scheme.
"Retailer interest in the development remains strong and we are looking forward to announcing further retailers soon."
Westfield also confirmed that the Broadway scheme would still be anchored by Debenhams and M&S.
Councillor Ian Greenwood, leader of the Council's Labour group, said: "I'm disappointed that Bhs has pulled out. It will be the end of a relationship with Bradford that goes back some years.
"I don't believe it fundamentally affects the viability of Westfield's development. Other anchor tenants are still in place.
"A number of large national multi-store groups are reassessing their strategic plans and Bhs is one of those. It's unfortunate, but I don't think it's a terminal fault in the Westfield development."
Councillor Jeanette Sunderland, leader of the Council's Liberal Democrat group, said: "I am very disappointed about Bhs. It chose to move away from Bradford and I am disappointed it is choosing not to reinvest back in Bradford.
"I'm concerned when what appears to be an anchor tenant has chosen to invest elsewhere that that's not the start of the city centre unravelling."
Balbir Panesar, president of Bradford Chamber, said: "The news is disappointing and will be greeted by some as an opportunity to criticise the scheme's progress.
"But there's still great confidence in the project and what it means to the city centre. We can see that preparation work is now under way on site and we are sure that this development allows Westfield to offer opportunities to other retailers.
"The city still has much to offer investors and we believe the scheme is still on track."
Val Summerscales, secretary of Bradford Chamber of Trade, said: "We are very disappointed about Bhs, but we have every confidence in the commitment of the rest of the traders involved in the scheme."
Meanwhile, enabling work on the site continues, with Westfield in the process of unearthing the remaining concrete foundations from buildings that were previously on site.
The company has pledged to re-use and recycle building site materials, with many of the recovered materials set to be recycled as part of the preparatory works for the new centre, rather than being removed from site.