Target has announced that it will be closing all of its stores in Canada after taking a gigantic $5.4 billion charge in the fourth quarter to reflect the loss from the investment. A failed expansion and slow holiday sale season brought about the huge losses, and those things are resulting in the closing of 133 stores.
CBC reported that Target has decided to discontinue all operations in Canada as announced on Thursday morning. This comes just two years after opening to a huge ovation, but it has all faded fast.
After just its first year, Target lost almost $1 billion in Canada. Losses have gone down since then, but the chain is losing money daily, and it didn’t seem to be stopping anytime soon.
Brian Cornell, CEO of Target U.S., released a statement on Thursday to try and explain the reasoning for shutting all Canada stores.
“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.”
Canadian customers ended up facing prices at Target that were far higher than they thought they would see. Target also had issues with a distribution chain that ended up leaving store shelves empty for days and weeks at a time.
According to Toronto Life, Cornell knows that tough times are still coming, but they are going to work diligently at making things right.
“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.”
The closing of the 133 Target stores in Canada means that 17,600 people are about to be out of a job. Now, the company has already promised at least 16 weeks’ worth of wages and benefits for all those let go from their positions.
The company is seeking the permission of the courts to set up a $70 million fund to ensure that all employees get these wages and benefits. Target stores in Canada will remain open with employees staffed through the liquidation process.
With the loss of the 133 stores, Target is going to focus their attention on the United States’ market, where sales have been rising. The rise in sales has been moderate due to strong competition, but they are at least seeing gains unlike north of the border.
With the loss of Target in Canada, it just adds to other stores that have announced closings in the coming months. Mexx, Jacob, and Smart Set are three fashion shops that are also preparing to shut their doors.
[Image via Spencer Platt – Getty Images]