U.S. discount retailer Target to shutter Canadian operations
Minneapolis-based company's decision to pull out of Canada will affect 133 stores, 17,600 employees across country
MINNEAPOLIS—American discount retailer Target Corp. announced plans to abandon ship on its struggling Canadian operations this year, affecting 133 stores and 17,600 employees across the country.
According to Target, its Canadian subsidiary, Target Canada Co., filed for creditor protection Jan. 15, the first step in its plans to discontinue operating in the country.
“When I joined Target, I promised our team and shareholders that I would take a hard look at our business and operations in an effort to improve our performance and transform our company,” Target chair and chief executive Brian Cornell said in a statement.
Cornell added that the company was “unable to find a realistic scenario” where Target Canada would be profitable before “at least 2021,” about 10 years after the company first announced plans to expand into Canada by purchasing the leases to Zellers Inc. stores from Hudson’s Bay Co. (HBC) for about $1.8 billion.
“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 said it is asking for court approval to voluntarily set up a $70-million employee trust.
This, according to the company, would provide “nearly all” Target Canada employees a minimum of 16 weeks of severance.
Target said it plans to establish a US$175-million debtor-in-possession credit facility to finance operations during the creditor protection proceedings.
The Minneapolis-based retailer said it expects to report approximately US$5.4 billion in pre-tax losses in the fourth quarter of 2014 related to the Target Canada closure.
It expects to report another US$275 million in pre-tax losses in the 2015 fiscal year.
The company did not say when it expects its stores to officially close their doors.