Just two years after entering the Canadian market the US retail chain is calling it quits in Canada. It will close all its 133 stores and lay off over 17-thousand employees as it begins liquidation.
The retail giant entered the Canadian market with great fanfare as a low cost alternative with good quality items in 2013, but quickly lost appeal with customers over partly stocked shelves, and prices that were no different than other retailers, In addition, many consumers found that they could buy the same items in Target stores in the US for far less.
In the first four quarters in Canada, the operation lost $941 million which drew down the value of the US parent company shares.
In mid-2014, faced with lackluster performance and and equally lackluster reputation among Canadian consumers, Target launched a campaign saying it was committed to Canada and to improving the shopping experience.
Over the critical Christmas shopping season, the stores did not meet expectations, and was losing money in its Canadian operations every day.
In making the announcement Target Corp. Chairman and CEO Brian Cornell said Thursday, “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,”
Target has 133 stores in Canada (compared to 1801 in the US) and some 17.600 employees. Target employees will geta minimum of 16 weeks compensation.
The cost to close down Canadian operations is estimated to be between $500-600 million, which the company says it has resources to cover.
The company’s stock gained over $2 before market opening.
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