Retail chain opened up in spring of 2013 but has decided to close up shop
By Pete Evans, CBC News Posted: Jan 15, 2015 8:37 AM ET Last Updated: Jan 15, 2015 10:11 AM ET
Target says it plans to discontinue all operations in Canada and seek protection from creditors, less than two years after opening to much fanfare.
In a release early Thursday, the U.S. retail chain said it will close all its locations in Canada. There are 133 stores across the country with about 17,600 employees.
The company launched in Canada in the spring of 2013.
But after high expectations, the chain failed to deliver right out of the gate as customers faced higher-than-expected prices, and empty shelves as the retailer had problems with its distribution chain.
- How Target missed the mark in Canada
- Target's failed launch offers lessons for other Canadian retailers
Target lost almost $1 billion in its first year in Canada, and while the losses have shrank since then, the chain is still losing money daily.
Executives repeatedly promised they would get it right and reaffirmed their commitment to Canada as recently as July, but ultimately decided to pull the plug.
"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," CEO Brian Cornell said in a release Thursday, explaining the justification for the shutdown.
Target says it filed an application in a Toronto courtroom for protection under the Companies’ Creditors Arrangement Act.
The federal law allows companies that can't pay their debts the ability to restructure themselves. Without it, the companies and individuals that an insolvent company owes money to can technically start seizing assets. But because Target has applied under CCAA, that won't happen here yet.
Target's shareholders welcomed the news, sending shares in the company up almost three per cent on the NYSE on Thursday. Closing up shop in Canada means the company has more money to focus its efforts on shoring up its also-struggling U.S. operations.
Reda more here: http://www.cbc.ca/news/business/target- ... -1.2901618