Ghost Stories did extremely well in Japan. A 12.5% avg viewer rating put it in the top 10 most popular airing anime of the week.
Source.
The anime has re-aired on Japanese TV 5 times (once ever ~3.5 yrs since it's creation), most recent being this year right fucking now. Ep 17 just showed on TV today.
Source. Why would a flop of a show re-air? Answer: it doesn't. Popular shows get re-airs.
The anime has received 2 DVD releases years apart.
Source is just Amazon.co.jp. Why would a flop of a show get two DVD releases let alone one? Answer: it doesn't. Popular shows do.
Greg Ayres lied about the show flopping in Japan
in a Q&A stating "it didn't do well on TV" when we have data from above proving him wrong. It did extremely fucking well and to this day is still doing extremely fucking well.
This person gives a good reason as to why they might have lied.
Another user said I wouldn't be surprised if ADV wanted the narrative to be, "The Japanese told us it sucked and we'd have to rework it", rather than, "We license whatever we get our hands on and make it sell any way we can." It seems the initial reception to the dub wasn't great, so in other words, it is in their best interest to say that's how things played out.
Which is likely considering at in the Q&A @ 03:00 Greg even says that "in America no-one would have seen this show" in reference to the original regular translated script indicating that they either 1. licensed it knowing it that they were going to do a gag dub or 2. licensed anything they could get their hands on and realized it wouldn't sell in America too late so they made a gag dub--which in turn gave them reason to lie.
Also, who in the fuck licenses a show that sucked in Japan? Wouldn't it suck in other countries too? Why take that gamble? It's not like they don't have TV ratings they look at on what to license. They probably just grabbed that license because it was doing so well in Japan and realized later "oh yea, the avg American anime watcher isn't as immersed in youkai culture or in-depth in Japanese culture as we professionals are so this is going to not sell well." It's kinda the reason why Youkai Watch is doing so
poorly in the US too.
So that's where the "flop" info comes from; a lie from a staff member at a convention almost a decade ago.