Target Corporation is shutting shop in Canada by closing all of its 133 stores after just two years of operations, putting more than 17, 000 jobs at risk.
Filing an application for bankruptcy protection under the Companies’ Creditors Arrangement Act (the “CCAA”) with the Ontario Superior Court of Justice (Commercial List) in Toronto (the “Court”), Target Canada is finally calling it quits after battling tough competition from fellow American rivals such as Walmart and Costco.
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Target’s US parent has pulled the plug on Canadian operations, opting instead to focus on the American business. It remarked in a statement that Target Canadawon’t be profitable before 2021, with the retailer having racked up more than $2bn in net losses since 2011.
Commenting on the closure, Target Corporation chairman and CEO Brian Cornell said: “When I joined Target, I promised our team and shareholders that I would take a hard look at our business and operations in an effort to improve our performance and transform our company. 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.
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.”
To ensure fair treatment of Target Canada employees, the firm is seeking the Court’s approval to voluntarily make cash contributions of C$70m (approximately $59m) into an Employee Trust.
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By GlobalDataIf it is approved, the proposed trust would offer a minimum of 16 weeks of compensation, including wages and benefits coverage to nearly all Target Canada-based employees.
Target said that its Canadian stores will continue to remain open during the liquidation process.
The retailer was often criticised for its ill-prepared Canada launch as the country is witnessing tough competition with various local and international players. Uncompetitive pricing and poor range of stocks were cited as the major reason for lower footfalls in Target Canada stores.
Before Target, other American retailers as Best Buy and Big Lots had also shut shop in the country.
