Target Corporation (NYSE:TGT) missed the mark in its attempt to win the hearts of Canadians, and after struggling to turn a profit for 20 months, the company has had enough.
The company announced January 15 that it is discontinuing its Canadian operations and that Target Canada has filed for creditor protection. All 133 stores across the country – including 15 in British Columbia – will be closed, and 17,600 employees nationwide will be out of a job.
Brian Cornell, Target Corporation chairman and CEO, said if Target Canada were to continue as-is, it would be several years before it made any money.
“After a thorough review of our Canadian performance and careful consideration of the implications of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” he said.
All stores will remain in operation during the liquidation period.
The cost of closing the Canadian operations is expected to be in the range of $500-$600 million. Target Corporation said it has sufficient cash on hand to fund this.
The parent company is seeking court approval to begin the liquidation process and to voluntarily pay $70 million (worth approximately US$59 million) into a trust for the employees it is laying off. This would give employees a minimum of 16 weeks of compensation, including wages and benefits for those staff members not required during the liquidation process.
“Target Corporation expects to report approximately $5.4 billion of pre-tax losses on discontinued operations in the fourth quarter of 2014, driven primarily by the write-down of the Corporation’s investment in Target Canada, along with costs associated with exit or disposal activities and quarter-to-date Canadian Segment operating losses prior to today’s filing,” the parent company said in a press release.
“Target Corporation expects to report approximately $275 million of pre-tax losses on discontinued operations in fiscal 2015.”
The Canadian arm has been struggling since first entering Canada in May 2013. In May 2014, the company announced it had fired Canadian operations president Tony Fisher.