Target leaves Canada after less than 2 years-17,000 jobs to be lost
HughFreakingDillon
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http://winnipegfreepress.com/business/newsalert-target-to-pull-out-of-canada-close-its-133-locations-288671621.html?cx_navSource=d-tiles-2
TORONTO - Less than two years after Target Corp. threw open the doors of its first Canadian stores with grand expectations , the discount retailer is retreating back to the United States in defeat.
The Minneapolis-based company said Thursday it has decided to wind up its money-losing operations in Canada, a move that affects 133 stores and 17,600 employees across most of the country.
"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," said Brian Cornell, who became the U.S. company's chairman and chief executive last year, in the announcement.
While many retail analysts have anticipated Target's exit for months, the move raises new questions about how the company's absence will reshape the retail landscape.
Before its launch, Target was once considered the biggest threat to Canadian businesses, partly because its reputation with consumers was unique. Many Canadian shoppers would trek south of the border to wander the aisles of U.S. Target stores in search deals and products they couldn't find at home.
But when Target arrived in Canada the story wasn't the same, as complaints flooded social media about empty shelves, high prices and a selection that fell short of expectations.
Target waited until after the holiday shopping season to determine whether there was any hope in turning around its fumbled plan to become a national retailer that aspired to compete with the likes of Walmart, Canadian Tire (TSX:CTC.A) and Hudson's Bay Co. (TSX:HBC).
"They have the holiday results by now, and they know how much they lost for the year," said Antony Karabus, chief executive of HRC Advisory, a firm that consults with retailers.
"That's the time to make a decision."
Target Corp. will record about US$5.4 billion in pre-tax losses in its fourth-quarter with most it related the Canadian operation.
The company said it would provide US$175 million of credit to fund Target Canada's operations while it winds down under the Companies' Creditors Arrangement Act, or CCAA, which is one of the Canadian equivalents to the U.S. Bankruptcy Act.
RBC analyst Irene Nattel said it is unclear who would be in a position to take over Target's 133 stores.
"In our view, there is unlikely to be any single operator that takes over the leases, the location quality of which is mixed at best," Nattel said in a note.
"Rather we could see existing retailers including Wal-Mart Canada and Canadian Tire perhaps picking up selected locations."
Target says the stores will remain open during a court-supervised liquidation period and it's working to ensure employees are paid at least 16 weeks of severance.
The company says it will also work with an adviser to sell its real estate and expects to spend between US$500 million and US$600 million in cash to end its Canadian operations.
TORONTO - Less than two years after Target Corp. threw open the doors of its first Canadian stores with grand expectations , the discount retailer is retreating back to the United States in defeat.
The Minneapolis-based company said Thursday it has decided to wind up its money-losing operations in Canada, a move that affects 133 stores and 17,600 employees across most of the country.
"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," said Brian Cornell, who became the U.S. company's chairman and chief executive last year, in the announcement.
While many retail analysts have anticipated Target's exit for months, the move raises new questions about how the company's absence will reshape the retail landscape.
Before its launch, Target was once considered the biggest threat to Canadian businesses, partly because its reputation with consumers was unique. Many Canadian shoppers would trek south of the border to wander the aisles of U.S. Target stores in search deals and products they couldn't find at home.
But when Target arrived in Canada the story wasn't the same, as complaints flooded social media about empty shelves, high prices and a selection that fell short of expectations.
Target waited until after the holiday shopping season to determine whether there was any hope in turning around its fumbled plan to become a national retailer that aspired to compete with the likes of Walmart, Canadian Tire (TSX:CTC.A) and Hudson's Bay Co. (TSX:HBC).
"They have the holiday results by now, and they know how much they lost for the year," said Antony Karabus, chief executive of HRC Advisory, a firm that consults with retailers.
"That's the time to make a decision."
Target Corp. will record about US$5.4 billion in pre-tax losses in its fourth-quarter with most it related the Canadian operation.
The company said it would provide US$175 million of credit to fund Target Canada's operations while it winds down under the Companies' Creditors Arrangement Act, or CCAA, which is one of the Canadian equivalents to the U.S. Bankruptcy Act.
RBC analyst Irene Nattel said it is unclear who would be in a position to take over Target's 133 stores.
"In our view, there is unlikely to be any single operator that takes over the leases, the location quality of which is mixed at best," Nattel said in a note.
"Rather we could see existing retailers including Wal-Mart Canada and Canadian Tire perhaps picking up selected locations."
Target says the stores will remain open during a court-supervised liquidation period and it's working to ensure employees are paid at least 16 weeks of severance.
The company says it will also work with an adviser to sell its real estate and expects to spend between US$500 million and US$600 million in cash to end its Canadian operations.
new album "Cigarettes" out Spring 2025!
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Jesus, there aren't many business moves that go THAT badly on that big a scale! Did they not do their homework or what??
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Canada and the United States are geographical neighbors with many things in common. But for big American retailers, the Great White North might as well be another planet.
Target announced Thursday that it was closing its stores in Canada. New CEO Brian Cornell defended the decision by saying that Target (TGT) would not have been profitable in Canada until at least 2021.
But Target is not the only American retail giant to have problems in the land of hockey and poutine.
Sears (SHLD) has struggled in Canada for years, and the company announced in October it was selling a big stake in its Sears Canada (SRSC) unit in order to raise much-needed cash. (Sears isn't exactly a huge success on this side of the border either.)
Electronics retailer Best Buy (BBY) closed a bunch of stores in Canada two years ago. The company, which also owns Canadian electronics retailer Future Shop, laid off 950 workers last year in January.
And closeout retailer Big Lots (BIG) closed its Canadian stores in late 2013.
What's this all aboot? (Sorry. Couldn't resist.)
Antony Karabus, CEO of HRC Advisory, a retail consulting firm in Toronto, said some of these American retail chains expanded too aggressively.
In some cases, there just simply wasn't a need to open that many stores. After all, it's not like Canada is an emerging market with a middle class that has yet to be tapped.
Giant Tiger, Canadian Tire and London Drugs are just a few of several big Canadian retail chains that Target and others have had to face off (yes, a deliberate hockey reference) against.
"There is nothing wrong with the Canadian retail market," Karabus said. "Target just came in with all guns blazing."
Karabus praised Target for making the tough decision to leave Canada and said that it's clear that the company has "priorities south of the border."
Some American retailers get it right. Still, some retail icons that had problems in Canada have been rewarded for sticking it out and turning things around.
Wal-Mart (WMT) and Lowe's (LOW) have both reported better results in Canada lately.
Wal-Mart CEO Doug McMillon said in a conference call with analysts last November that the company's sales improved thanks to investments Wal-Mart made to remodel its Canadian stores.
And Lowe's, which faced tough competition from Canadian home improvement retailer Rona, noted in its most recent earnings report in November that its Canadian operations have now reported same-store sales increases of at least 10% for the past six quarters. (Lowe's actually tried to buy Rona a few years ago but Rona rejected the offer.)
"The best companies have adapted and learned from their mistakes," said Wendy Evans, president at Toronto-based Evans & Company Consultants, a retail advisory firm.
Karabus said several other U.S. retailers are having no problem in Canada. He noted that Apple (AAPL, Tech30) stores are a big hit and that Costco (COST) has done a "remarkable job" in Canada.
Nordstrom may actually hit the bull's eye in Canada. He also said there are early indications that luxury retailer Nordstrom (JWN) is off to a promising start with its Canadian expansion.
Nordstrom, unlike Target, is taking a gradual approach to Canada. Target acquired the leases of Canadian retailer Zellers in 2011 for $1.8 billion and used them to open up nearly all of its stores in 2013.
But Nordstrom has just one store so far. It's in Calgary and it opened in September. The company's next store will open in Ottawa in March and a Vancouver location is set to open this fall.
Nordstrom CFO Michael Koppel said at a Goldman Sachs retail conference in September that the company studied the Canadian market for years before deciding to enter the market.
"We did a very methodical purposeful acquisition of real estate. It was all done organically. We worked with partners there, and then over a several year period, we were able to get what we believe are the A plus locations," he said, adding that positive feedback from Canadian customers who shopped with Nordstrom online also helped the company.
So if other American retailers are looking to make the big jump across the 49th parallel, they probably would be better off looking at how Nordstrom is doing it than following Target's example.
Target went big. And then it had to go home
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nice. it seems that it just isn't the canadian way to accept brash and loud american businesses who try to barge their way in without an invite.
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I know. that was just a tongue-in-cheek response to jasonp's post.
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Just too bad for the job's that'll be lost ...
"Life Is What Happens To You When Your Busy Making Other Plans" John Lennon
http://www.huffingtonpost.ca/2015/01/15/retailers-closing-canada_n_6480972.html
"Life Is What Happens To You When Your Busy Making Other Plans" John Lennon
I was just playing up the stereotype like he was! I need to work on my interweb sarcasm. Lol
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But not that smiley, who still looks like someone poked him in the eye.
Exactly. People buy shit from those places. That's all there is there.
Granted these places sell shit. Can you both say that neither of you has made a purchase at either store?
No, I cannot, PJfan.
Here's my story on that: The closest Target to my home is about 25 minutes from here so that's easy- I don't need to drive 25 miles for any kind of trashy product. I have made a few small plumbing and electrical purchases from the local Walmart which is about 4 miles from my home but I did not make my those purchases until first calling every other retailer I could think of that was within about 8 miles from home. Purchasing those few items from Walmart was a more responsible choice that eating up the gas it would have taken to drive to another city or have some big UPS truck deliver a small item here. And why did only Walmart have those items close to my home? Because Walmart moved in and closed down two very fine independent stores that had been run by local folks here for decades. I how did I feel about making those purchases at Walmart? Terrible. Those few times I've walked into that store I felt a moderate degree of shame, disgust and anger. Are those feelings a bit over the top? I wonder how those nice folks feel whose stores were shut down?
Secondly, I do also have a guitar that was originally purchase at Walmart. In fact, I'm told, it was solely distributed in limited numbers at Walmart. The guitar is a First Act Paul Westerberg model that I bid on and won on eBay. I passed on buying one of these when they first came out and was unhappy that Westerberg may have allowed Walmart only distribution. I'm not sure if buying mine on eBay makes me a hypocrite. I will confess, however, to still being a major P.W. fan!
http://www.timescolonist.com/news/local/target-pullout-sparks-look-by-b-c-based-london-drugs-1.1732895
I am totally with you on the independent store thing. There is just something so different in that experience; it's almost organic. Something on the other side of the coin that i just thought of; is it better to have a few independent stores that have 3-5 employees, or a big store that pays the wages of 100+ people, with even the possibility of a benefits plan to boot?
I love going into my local record store and chatting up the owner for a while, instead of waiting in line at hmv with all the other capitalist pigs. But they also drive the economy a lot more. For better or worse, mind you.
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We all feed it, and in the process feed each other.
I think I've been in a Target store twice in my life. The last time was several years ago when we were going through really tough times. My mom took me there and as she treated me to make-up and toiletries and other shit considered luxuries at the time, we talked too as we strolled down the aisles. Afterward too.
It was sweet time spent together, and even if the financial cost was minimal, the experience there is firmly in my memory.
Got a similar story about Costco too!
I just love that expression, "capitalist pig". Reminds me if all the movies from the 80's with soviets in them. Not justifying anything, I'm just wondering if anyone has any insight into if there are any pros to big box stores vs smaller independent stores. As I said, I much prefer going to indie stores, but does anyone know any stats on small vs big with regards to employment rates, poverty, etc?
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