Target Shuttering 133 Canadian Stores
Target’s decision regarding its Canadian operation did not come as a complete surprise to business analysts, since Target has been struggling to maintain profitability in this region of the world for the past few years. Largely due to the performance of its Canadian retail stores, the retailer is expected to post four quarter losses of more than $5 billion. Although its Canadian operations proved to be a general drain on its financial resources, Target maintains that its U.S. operations continue to be strong and thriving. The shuttering of its Canadian operations will help to boost the company’s current fiscal year earnings and at the same time strengthen the company’s overall cash flow position.
“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,” CEO Brian Cornell said in a release Thursday, explaining the justification for the shutdown.
Officials at Target had previously admitted that they were counting on a strong 2014 holiday season in Canada to help turn the financial picture around, and were disappointed when that did not happen. Target says it is currently seeking bankruptcy court approval to place approximately $59 million US, or 70 million Canadian dollars, into a general fund which would provide four months of unemployment compensation and benefits for the more than 17,000 Target employees in Canada. Officials say they possess the roughly $500 to $600 million in cash necessary to formalize the end of its business operations in Canada. No exact date has been announced for the closing of the Canadian Target stores, with liquidation sales expected to get underway.