TORONTO – Target says it will close its stores in Canada — a market that it entered only two years ago.
The U.S. based retail company has 133 Canadian locations and 17,600 employees across the country.
Target Canada has struggled from the start and there has been speculation in business circles that its days were numbered.
Brian Cornell , who became the U.S. company’s chairman and chief executive last year, said he had promised to take a hard look at ways to improve the discount retailer’s performance.
“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,” Cornell said in a statement.
“Personally, this was a very difficult decision, but it was the right decision for our company.”
The company says the stores will remain open during a court-supervised liquidation period and it’s working to ensure employees are paid at least 16 weeks of severance.
Target says it will also work with an advisor to sell its real estate and expects to spend between US$500 million and US$600 million in cash to end its Canadian operations.
Target Corp. will also record about US$5.4 billion in pre-tax losses in its fourth-quarter, mostly related to the Canadian operation.
The company said it would provide US$175 million of credit to fund Target Canada’s operations while it winds down under the Companies’ Creditors Arrangement Act, or CCAA, which is one of the Canadian equivalents to the U.S. Bankruptcy Act.
It is seeking to have the court appoint Alvarez & Marsal Canada as CCAA monitor, a role that acts as a liaison between the court, the company and other stakeholders.
Wow. 16 weeks severance. Nice to see such a large Corp care for its empoyees.
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