Target to Close All 133 Target Canada Stores
MINNEAPOLIS, MN – Target is moving to close all 133 of its Canadian stores. CEO Brain Cornell shared that despite the “tireless work and determination” of Target's Canadian team, Target Canada was unlikely to become profitable until 2021 at the earliest. In light of that timeline and after disappointing holiday retail numbers, Cornell came to the conclusion that it was in the retailer's best interest to close the operation in its entirety.
“Simply put, we were losing money every day,” Cornell shared on Target's blog, A Bullseye View. "After consulting with many leading third parties and carefully weighing the realities of the situation facing us in Canada, we decided that Target Canada would file for what is known in Canada as the Companies’ Creditors Arrangement Act (CCAA). It was the best option available to enable us to wind down our operations in Canada in a fair and orderly way.”
“We conducted a very comprehensive review and evaluated every possible option in Canada,” he continued. “Ultimately, after extensive internal due diligence and research, paired with counsel from outside experts, we fulfilled our obligation to do what was right for our company and our shareholders, and made the decision to exit Canada.”
Expanding too quickly had overextended Target's supply and support networks, leaving many stores with inventory issues and with numerous pricing issues. Even as Target's team worked to make improvements and correct some of these problems, challenges remained and customer perception of Target's Canadian brand suffered.
“We missed the mark from the beginning by taking on too much too fast,” Cornell explained. “Our stores struggled with inventory issues and we were not as sharp on pricing as we should have been, which led to pricing perception issues. As a result, we delivered an experience that didn’t meet our guests’ expectations, or our own. Unfortunately, the negative guest sentiment became too much to overcome.”
According to Kevin Sterneckert, Chief Marketing Officer for Order Dynamics, Target also underestimated the sheer diversity of the Canadian consumer base.
"A major issue in Canada is geography," he explained to USA Today. "The nature of the consumer in Canada changes dramatically depending on what region of Canada you're in."
According to CBC, Target has named SVP and Treasurer Aaron Alt as CEO of Target Canada, tasking him with the duties of overseeing the company's wind-down operations. International consultancy company Alvarez & Marsal has been hired to assist with this liquidation process.
In order to support its team during this difficult transition, Target has established a C$70 million trust, to provide “nearly all Target Canada employees with a 16 weeks of wages and benefits coverage.”
Investors reacted favorably to this news, driving up the company's stock $2.97/share to $76.99/share at the market's open on Thursday, January 15th, 2015.
Stay tuned to AndNowUKnow as we continue to track this situation as it develops.