WATCH ABOVE: Target arrived in Canada with much fanfare, but the American retailer is retreating with a whimper and closing all of its stores in Canada. Jennifer Tryon reports.
A lacklustre holiday shopping season put the final nail in Target Canada’s coffin.
The U.S. department store giant said Thursday it plans to discontinue operations in Canada, a move that will see 133 stores liquidated and affect more than 17,500 employees.
READ MORE: Here’s why Target failed in Canada
Target’s money-losing Canadian stores failed to turn themselves around during what experts and company watchers said was a make-or-break Christmas for the chain.
“We did not see the required step-change in our holiday performance,” Brian Cornell, Target’s chief executive, said in a press release.
The retailer launched in Canada in March 2013, rolling out 133 stores across the country. Poor sales plagued Target Canada though, as it struggled with merchandise stocking issues and perceptions about its prices being higher than what Target charged in the United States.
“We were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” Cornell said. “Personally, this was a very difficult decision, but it was the right decision for our company.”
Target plans to exit Canada in a “fair and orderly way,” seeking court approval “to begin a liquidation process.”
Target employs roughly 17,600 workers across its stores. The chain said it plans to set $70 million aside to provide “a minimum” of 16 weeks compensation to workers affected by Thursday’s decision.
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Target stores will remain open during the liquidation process.
Cornell, who was appointed in August, said late last year Target Canada would have to show significant progress in sales if deep changes such as store closures were to be avoided.
‘There is no doubt that the next several weeks will be difficult’
“The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests. We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance,” Cornell said.
“There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way.”
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Target said it would take a $5.4 billion writedown on its failed Canadian chain.
“As a result of the decision announced today, Target Corporation will operate as a single segment that includes all U.S. operations,” the company said.
Infographic credit: Janet Cordahi, Global News