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Gap pulls Old Navy from Japan due to sales dip, consumer disinterest

May 20, 2016

There will be no 'flip-flop' day happening in Japan this year as Gap is pulling its Old Navy brand out of Japan, shuttering over 50 stores due to declining sales and consumer disinterest.

A Bloomberg report states the move is due in part of consumers not embracing the clothing portfolio and spending less on retail clothing overall.

 "I'm obviously disappointed that we're going to be discontinuing operations, but I view it as a sign of a good company when you acknowledge that the business isn't going to deliver and you make changes and move forward," CEO Art Peck said in an earnings call, referring to the Old Navy closures, according to Bloomberg.

The retailer is not alone in feeling pain this year as Macy’s and other top retailers are hurting due to slow consumer sales. Gap is keeping its Gap and Banana Republic outlets open in Japan and said it will boost focus on China and North America with regard to Old Navy.

"Japanese consumers, who are generally shopping experts, are increasingly in money-saving mode," Toshihiro Nagahama, chief economist at Dai-Ichi Life Research Institute, told Bloomberg. "Living in a long-term deflationary environment, they have a strong sense that they don't want to fail at shopping. For foreign brands, Japan is one of the hardest markets to be successful."