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Old Navy to exit China before March

Old Navy

Gap Inc. said its Old Navy apparel brand would cease operations in China by the end of the month, following the news that the U.S. retail group has decided not to spin-off the retailer into a separate business entity.

SEE ALSO : Gap no longer separates from Old Navy

Via an announcement on the brand’s official Chinese website, Gap will close all its Old Navy stores in the Asian country in the coming two weeks, in a bid to home in on North American operations. All of its stores in the country will be closed by 1st March, 2020.

Simultaneously, Old Navy’s e-commerce stall on Alibaba-owned Tmall, has already stopped retailing. Owned by Gap, Old Navy first entered China in 2014. It currently operates ten stores across mainland China, with six of these in the nation’s capital, Beijing.

The news confirms Gap’s announcement in November 2019 of plans to eventually exit China, a market that has witnessed a sales slowdown for many global apparel and retail brands — such as Asos, Forever 21 and New Look — in recent years.

Now, adding to the woes for retailers in China is the recent coronavirus outbreak, which is preventing shoppers and tourists from visiting busy retail strips and malls in China, furthermore affecting sales.

The San Francisco-based apparel retailer in February said it had withdrawn previous plans to spin-off its Old Navy brand, as a separate company. The company said it plans to concentrate its efforts into growth-oriented strategies and expansion instead.

“The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands,” explained Fisher in a release at the time.

“While the objectives of the separation remain relevant, our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation,” continued Fisher.

SEE ALSO : Allbirds adds Old Navy executive to board

For its full-year outlook for fiscal 2019, the company expects annual sales to be down in the range of mid-single digits to low-single digits.

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