Minneapolis-based Target Corp. announced that it will cease operations in the Canadian market. The move will shut down all 133 Target Canada stores, which employ about 17,600 people. To wind down the business, Target’s indirect wholly owned subsidiary Target Canada applied for protection under the Companies’ Creditors Arrangement Act in Toronto.
“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,” said CEO Brian Cornell. “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 Corp’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 says it will be taking the extraordinary measure of putting C$70 million (about U.S.$59 million) in a trust for employee severance packages, amounting to “a minimum of 16 weeks of compensation, including wages and benefits coverage” for most workers.
This news confirms some of the rumors reported last week; analyst Brian Sozzi of Belus Capital Advisors predicted that Cornell, a former Sams Club CEO who joined Target in August, could pull out of Canada completely and speculated that Target could sell the 133 stores and three distribution centers to Walmart.