January 15, 2015
Just six months after being named chairman and CEO of Target, Brian Cornell is pulling the plug on the retailer’s 133 unit Canadian operation and will incur a $5.4 billion pre-tax loss in the fourth quarter to do so.
Target said it plans to discontinue operating stores in Canada through its indirect wholly-owned subsidiary, Target Canada Co. and that it had filed an application for protection under the Companie’s Creditors Arrangement Act (CCAA) with the Ontario Superior of Justice in Toronto.
“After a thorough review of our Canadian performance and careful consideration of the implcations of all options, 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. With the full support of Target Corporation’s Board of Directors, 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 currently operates 133 stores and employs 17,600 people throughout Canada. The company is seeking court approval to make a voluntary $59 million cash contribution into an employee trust that would allow employees to receive a minimum of 16 weeks compensation.
“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,” said Cornell. “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.”
Source: Retailing Today
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