MYER has backed down from legal action that would have thrown rival David Jones' fashion week into chaos.
However, Myer will still pursue designer Kimberley Ellery for damages amid allegations she breached an exclusivity contract.
The stores have been battling over the designer's label Ellery Land, which sells women's wear for between $600 and $3000.
Myer lodged an injunction against Ellery with the Victorian Supreme Court on January 18 after it discovered she would be supplying David Jones in 2013. Myer had signed a three-year exclusivity deal with her in 2011.
David Jones has put Ellery's clothes on the cover of its 2013 catalogue and will showcase Ellery Land at this year's launch.
The relationship between Myer and Ellery Land started to crumble in late 2012 after a business adviser, Chris Buchanan, found the label was losing money and needed to sell much higher volumes to Myer.
The final straw came with a suggestion by Myer's former general manager of merchandise, Judy Coomber, that Ellery could increase sales to Myer by designing women's office wear.
''I was shocked to hear that suggestion … Ellery is not a work wear brand,'' Ellery stated in an affidavit.
Attempts to reach Myer chief executive Bernie Brookes led to an email that made Ellery feel ''physically sick''.
He wrote: ''I have no interest in meeting with you. I have many loyal suppliers and designers who I allocate my time to,'' according to legal documents.
In court on Wednesday Myer said it would withdraw the injunction and instead proceed to trial, due to start on April 15.
A spokeswoman for Myer said it complied with the contract.
''We have an enforceable exclusivity agreement and will still be pursuing the injunction at the final trial. With that background, David Jones must decide whether it is appropriate to include Ellery in its fashion launch.''
Ellery alleges ''Myer was gaining more for their brand reputation … than Ellery Land was receiving from the relationship''.
Mr Buchanan said in his affidavit that Myer bought $187,000 of stock in 2011-12, while David Jones committed to $600,000 of wholesale purchases in 2013, according to Ellery's affidavit.
On Wednesday Ellery said she was pleased Myer withdrew the summons, which would have kept her clothes out of David Jones until the trial ended.
David Jones confirmed it would start stocking the brand in February.
Ellery confirmed David Jones was not paying her legal fees.
