Target Announces Plans to Close All of its 133 Stores in Canada
Target has announced plans to pull out of Canada entirely and focus on shoring up its U.S. business, the retailer announced today. Target Canada currently has 133 stores across the country and employs approximately 17,600 people.
Target entered Canada in a big way in 2013, opening 125 stores in just one year, but supply-chain-management problems and pricing issues arose quickly. Shoppers also complained that Target Canada's store prices were too high compared to comparable competitors.
Despite management's attempts to fix the problems, Target's Canadian stores failed to gain momentum during the recent holiday season. "We were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021," Target Corporation Chairman and CEO Brian Cornell said in a press release.
To ensure fair treatment of Target Canada employees, Target is seeking the Court's approval to voluntarily make cash contributions of C$70 million (approximately US$59 million) into an Employee Trust. The proposed trust would provide nearly all Target Canada-based employees with a minimum of 16 weeks of compensation, including wages and benefits.
"Personally, this was a very difficult decision, but it was the right decision for our company. With the full support of Target Corporation's Board of Directors, we have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business," Cornell continued.
Target expects that its decision to close its Canadian stores will ultimately increase its earnings in fiscal year 2015 and beyond, and increase its cash flow in fiscal year 2016 and beyond.