US discount retailer Target to abandon Canada
19 Jan 2015
US discount retailer, Target has announced it would cease operations in the Canadian market, after suffering financial losses of almost a billion dollars a year. The announcement comes after two years of operations in the market.
The decision would hit 17,600 employees when retailer closes its 133 Canadian stores.
Target Corp chairman and CEO Brian Cornell said on Thursday that the company saw no way for the chain to become profitable before at least 2021. He wrote on Target's corporate blog that the company's Canadian arm was losing money every day.
The closure would come as Cornell's first major move since taking over as CEO in August. Target will now focus on improving its US business.
According to Cornell, Target Canada did not see the improvements it was looking for over the holiday period.
The US retailer entered Canada in 2013 and while operations improved before the holiday season due to changes in pricing and product assortment, Target still was not satisfied with its performance.
According to Cornell, Canadian stores struggled with inventory and pricing problems and 'delivered an experience that didn't meet our guests' expectations, or our own.'
Target's experience in Canada had not been unique as it joined Big Lots Inc and Best Buy Co that had shuttered stores there. Also Wal-Mart Stores Inc had seen its sales in Canada weaken.
Meanwhile, BBC reported Target Canada, which filed for bankruptcy protection, faced tough competition from Walmart and Costco, which opened in the country years ago.
According to Target the closure was in the "best interest of the business".
Chairman and chief executive Brian Cornell said in a statement: "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."
He added, the focus would be on "driving growth" in the US, where it operated 1,801 stores.
