By Barry Ellsworth
TRENTON, Ontario
Giant American retailer Target missed the bulls-eye with Canadian shoppers and will close all 133 of its stores in Canada and file for creditor protection, the company announced Thursday.
It is a stunning blow to the retail sector in Canada, putting 17,600 employees out of work.
Target Canada said most employees will receive a minimum 16-week severance package, including those let go during the court-appointed liquidation, as it has set aside $70 million in an employee trust. The company expanded into Canada less than two years ago.
“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,” Target Corporation Chairman and CEO Brian Cornell said in a statement.
The company estimated it would cost about $500 million to $600 million to shut down its Canadian operations.
While a huge success in the United States, Target stumbled from the start when it entered the Canadian retail sector in April 2013.
It opened predominately in locations vacated when another retailer, Zellers, closed its department stores.
In Target Canada’s first year, the company experienced trouble obtaining stock and shelves were at times bare in some sections of its stores. This was followed by a massive data breach and a billion dollar loss in its first year.
In a comparison between Walmart and Target stores across Canada in mid-December – during the important Christmas rush period – a retail information gathering service for 30 out of 38 Walmarts were busy while only 15 Target stores were considered busy.
“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.
He said the decision to close the Canadian stores was not easy.
“There is no doubt the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate manner,” he added.
