It’s true – the going-out-of-business sales are about to begin. Target is going bust! In Canada.
The retailer announced this morning that its disastrous expansion north of the border is coming to an end, less than two years after it began. The company is asking a Canadian court “to oversee the liquidation and wind-down process” for Target Canada’s 133 stores.
“We were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” Target CEO Brian Cornell said in a statement. “We were losing money every day.”
Six years would have been an awfully long time to wait to turn a profit – and a long-term drag on the company’s profitability in the U.S. So Cornell, who took over as CEO less than six months ago, decided to pull the plug instead. “This was a very difficult decision, but it was the right decision for our company,” Cornell said. “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.”
The U.S. business has been challenging enough, after 2013’s data breach sent shoppers scurrying away, and prompted Target to ramp up the deals in an effort to win them back. Turning around the company’s decline was one of Cornell’s main challenges in his new role.
Figuring out what to do about Canada was the other.
Since opening its first stores outside the U.S. in March 2013, Target’s Canadian division lost more than $2 billion. As Target-crazy as many American shoppers are, Canadian shoppers were largely underwhelmed, to put it mildly. Even those who were familiar with Target from visits to the U.S. were unimpressed by what they saw back home – a smaller selection, at higher prices, in tired buildings that were not newly-constructed to Target’s specifications.
“We missed the mark from the beginning,” Cornell said in a candid Q&A posted on Target’s website. “Our stores struggled with inventory issues and we were not as sharp on pricing as we should have been… Unfortunately, the negative guest sentiment became too much to overcome.”
While the shutdown is bad news for Target Canada’s few apparent fans, it could be a silver lining for American shoppers, as Target will be freed up to invest more in its U.S. business. “We are encouraged by the early momentum we see in our U.S. business,” Cornell said. So now, “we have to thoughtfully focus and prioritize the guest like never before.”
In the meantime, Target will soon begin liquidation sales in its 133 Canadian stores, and offer severance to its 17,600 Canadian employees. No word yet on what might happen to all of those soon-to-be-vacant buildings, but some analysts expect Target could sell at least some of its locations to Walmart, which “views Canada as ripe for epic domination,” Brian Sozzi of Belus Capital Advisors recently predicted.
So if you’re looking for a great deal at Target, might want to skip your local store and head north instead. While you still can.
Image source: Target
