An Old Navy Store Photo: VCG

Old Navy, a sub-brand of US apparel group GAP, will quit the Chinese market in 2020 and focus on North America to maximize gains as it is facing a profit decrease, media reported.

According to the China News Service, the GAP Group (GAP) plans to split the brand, founded in 1994 and launched in the Chinese market in 2014, into a dependent listed company. The process will be completed as soon as next year, at which time it will close its stores in China.

"Foreign companies usually leave China because they see a decrease in profits due to the tariffs caused by the trade war, as the tariffs make them less competitive,�?Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics, told the Global Times on Tuesday.

The announcement came as GAP is facing a decline in profits. According to its financial statement released on Friday, its total sales in this year's first three quarters sank to $3.99 billion, 2.2 percent lower than the year before, and its gross profit was $1.56 billion, down 4 percent year-on-year.

GAP's announcement seemed to be linked to the trade war between China and the US. Since the trade war was initiated by the US last year, the US government has imposed tariffs on many Chinese products, including clothing.

In June, GAP took steps to limit its exposure to Chinese sourcing amid the trade war, with its CEO Art Peck saying that the tariffs "largely translate into a tax on American consumers,�?the Sourcing Journal reported.

According to Sang, competition in the apparel industry is strong, especially for middle and low-end apparel makers as their products are highly replaceable, and the imposed tariffs could make them even less competitive.

According to its official website, which is still live, Old Navy has 10 stores in China, six of which are located in Beijing. Old Navy's decision to leave China has caught some consumers off guard.

"The brand is prominently located in several shopping malls in Beijing, the price is moderate and the quality is good. I never thought it would leave,�?the China News Service reported, citing a customer surnamed Li.

Old Navy is not the only one facing closures. US apparel brand Forever 21 also began closing its stores in China. The company filed for bankruptcy protection in September and has ceased operations in more than 40 countries, according to the China News Service report.

Citing industrial expert Ma Gang, the China News Service reported that fast-fashion brands are facing challenges in finding a breakthrough in the industry, including how to accomplish localization.