Target Will Abandon Canada After Racking Up Billions in Losses
(Bloomberg) — Target Corp. will abandon its operations in Canada after less than two years, putting an end to a mismanaged expansion that racked up billions in losses.
The Canadian business is seeking court approval to begin liquidiation, the Minneapolis-based retailer said today in a statement. The move will lead to a $5.4 billion writedown.
This is the first major strategic shift made under Chief Executive Officer Brian Cornell, who took over for Gregg Steinhafel last year. Steinhafel had seen Canada as burgeoning market for Target, the second-largest U.S. discount chain, because so many Canadians already knew the brand and would cross the border to shop at American stores.
Fixing the Canada unit, which amassed more than $2 billion in operating losses since 2011, has been a top priority for Cornell. After taking the reins in August, he spent a portion of his early days at the company touring operations in Canada. The woes plaguing the company’s 130 stores there ranged from empty shelves to prices being higher than locations in the U.S.
“We were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” Cornell said today. “This was a very difficult decision, but it was the right decision for our company.”
Target announced its foray into Canada in 2011 with the purchase of 220 locations from Zellers Inc., a subsidiary of Hudson’s Bay Co., for about C$1.8 billion. The deal cemented the chain’s first expansion outside the U.S., where it had about 1,750 stores at the time.
Target’s shares have rebounded since taking a hit following a data breach during the 2013 holiday season. The stock had gained 21 percent to $74.33 over the past 12 months through yesterday.
To contact the reporter on this story: Matt Townsend in New York at firstname.lastname@example.org To contact the editors responsible for this story: Nick Turner at email@example.com Niamh Ring