Instead, it's switching its focus on its stand-alone stores, e-commerce and to expanding overseas, said Kevin Groh, the company's vice-president of corporate affairs.
The company has six stand-alone stores in the U.S., including a flagship location in New York's ultra-hip SoHo neighbourhood.
Groh said the deal to sell Joe Fresh clothing at 200 J.C. Penney stores is set to expire on Jan. 30, 2016, and will not be renewed through mutual agreement.
Mario Grauso, an American fashion industry veteran, took over from the low-cost clothing line's founder, Joe Mimran, in March.
"What you're seeing is the unfolding of the vision under Mario Grauso," Groh said. "This is a brand that is maturing and making wise decisions about where its investments make the best sense."
Groh said the decision to withdraw its products from J.C. Penney stores was driven by a reconsideration of the company's direction.
The five other American stores are under review and may close in order to be converted to the SoHo "gold standard" blueprint, he said.
Loblaw currently has agreements in South Korea, the Middle East and Mexico, where it has opened 15 new stores since the beginning of last year.
Joe Fresh expanded its presence in the U.S. market in 2013 after almost 700 J.C. Penney stores began carrying its product line.
Follow Peter Henderson on Twitter @Henderburn.
Also on HuffPost