Target is to pull the plug on its Canadian operation after its chief executive said it was unable to find a route to profitability before 2021.
Target has 133 stores in Canada and 17,600 staff, and is looking to offer the vast majority 16 weeks of wages to compensate them for redundancies. The payout will cost $59m (£39m) which is being put into a trust. The company is now looking for court approval to begin the liquidation process.
Target’s problems in Canada have largely stemmed from an inefficient supply chain and a less than optimal pricing strategy. According to reports, shelves were often inconsistently stocked meaning customers were disappointed.
The write down will be of an impressive magnitude, costing around $5.4bn. While drinking in the last chance saloon, Target Canada’s sales over the festive period were unable to boost the company sufficiently to prevent the closures. What is more, the company was competing in a marketplace different to it usual US hunting grounds, where it is an established name. It was unable to take the fight to its new Canadian rivals and paid the price.
Chief executive Brian Cornell said:
The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests. We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance.