Target bails out of Canada, to close 133 stores

REUTERS/Fred Thornhill
Target store in Lindsay, Ontario

Well, that didn’t go well, did it?  At Fortune John Kell writes, “Target said Thursday it will exit the Canada market, a recent expansion that has resulted in billions of losses and a move that will lead the retailer to book a massive $5.4 billion charge in the fourth quarter to reflect the loss from the investment. … The move, while likely to catch many on Wall Street off guard, has clear justification. Though sales for the first nine months of fiscal 2014 leapt 90% to $1.32 billion, the segment’s loss swelled to $627 million for earnings before interest and taxes. Losses for the business totaled $941 million in 2013, $369 million in 2012 and $122 million in 2011. With that business mired in the red, Target’s overall profitability was severely challenged.”

Colleague Phil Wahba says, “In 2011, Target bought the store leases of the now defunct Canadian discount chain, Zellers, for $1.8 billion from HBC, a move hailed at the time as brilliant, as it gave Target an immediate cross-country footprint and spared it the expense of building out its own stores. (Target now has 133 stores in Canada, versus nearly 1,800 in the U.S.) But the reality is that most Zellers stores were dumpy, poorly configured for Target’s big-box layout, and were in areas not frequented by the middle class customers Target covets. And inheriting many awful locations from a dying low-end retailer was at the heart of the damage to Target’s cheap-chic allure in Canada.”

At CBCNews John Bowman collects some Twitter reaction.

“Not since the War of 1812 have Canadians so successfully repelled an American invasion.”

“Pricier than Zellers, less selection and overall a huge disappointment.”

“That’s a shame. But did they expect Canadian consumers to not notice difference between Cdn & US stores?”

“Had they opened a full scale (US type) operation, it would have been a success.”

At Ashley Lutz says, “Target announced it is pulling out of Canada after losing more than $US2 billion. Meanwhile, electronics retailer Sony is closing all 14 of its Canadian stores. So what is going wrong in Canada? The struggling Canadian retail market is “a recipe for disaster” for companies like Target, Doug Stephens, founder of industry website Retail Prophet and author of ‘The Retail Revival: Re-Imagining Business for the New Age of Consumerism,’ told Business Insider. … Target Canada was plagued by empty shelves and poor customer service. The retailer also built stores in less-than-ideal areas, and consumers didn’t feel compelled to make the trip. ‘Target busied itself making excuses and creating ad campaigns to convince Canadians that things were getting ‘better each day,’ when in fact they really weren’t improving nearly fast enough,’ Stephens said.”

For the Strib, Kavita Kumar says, “Target said it received preliminary approval this morning for its application for protection under the Companies’ Creditors Arrangement Act with the Ontario Superior Court of Justice in Toronto. As part of that process, the court also gave approval for Target to make voluntary cash contributions of $59 million into an employee trust to give its 17,600 employees in Canada at least 16 weeks of compensation.”

Promise you’ll stop having jihadist impulses. The AP’s Amy Forliti reports, “Attorneys for a man accused of trying to travel to Syria to join the Islamic State group are proposing that he be freed pending trial if he promises to participate in courses that promote civic involvement. The defense came up with the idea after U.S. District Judge Michael Davis said in December he would consider releasing Abdullahi Yusuf if there was a plan for Somali elders and community leaders to help monitor his actions. The defense proposal requires that Yusuf participate in a program by the nonprofit group Heartland Democracy aimed at helping disaffected young people connect with their communities.”

What can you say? Stribbers Dave Chanen and Brandon Stahl on the apparent suicide by a 6-year-old. “The manner of death of a 6-year-old girl who died with a jump rope around her neck Dec. 27 in her foster home cannot be determined, Brooklyn Park police said Wednesday. But records obtained by the Star Tribune show investigators strongly considered the possibility that Kendrea Johnson committed suicide. Deputy Chief Mark Bruley said that the evidence kept leading investigators to the belief that she intentionally killed herself, but that the department also agreed with the Hennepin County medical examiner that such an act is ‘outside what a normal 6-year-old could think about.’ ” You certainly want to think so.

One long-running dispute/negotiation may have been resolved. The AP says, “Newly unionized in-home health care providers have reached a contract agreement with the state. About 27,000 home care workers would be paid a minimum of $11 hourly. The contract also provides funding for training and five days of paid time off. The Service Employees International Union announced their tentative contract on Thursday. It will have to be approved by union members and the Legislature.”

From the LaCrosse Tribune, Annie Jungen reports, “A Taylor, Wis., man who led authorities on an 11-mile pursuit Tuesday through La Crosse and Trempealeau counties surrendered when he lost his prosthetic leg trying to outrun police, according to court records. … Authorities from both counties followed footprints into a wooded area for more than one mile and across a creek before a deputy found [Thomas] Fuselier on the ground unable to get up because his prosthetic leg was stuck in a fence, according to the complaint. Police found meth and a pipe in his car.”

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Comments (2)

  1. Submitted by Thomas Swift on 01/15/2015 - 03:19 pm.

    Do union nannies make at least the state’s minimum after SEIU takes it’s cut?

    • Submitted by Samuel Doten on 01/16/2015 - 12:39 pm.

      Yes, they would still make more than the minimum after union dues. Even if SEIU’s dues were exceptionally high at $1000/year, that only comes to $0.48/hour which is an exceptionally prudent investment when accounting for the benefits and extra pay that a mere 48 cents yields.

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