By Chelsey Dulaney
Target Corp. said Thursday that it is exiting its Canada
business after just two years, saying it couldn't find a realistic
scenario that would get the segment to profitability by its goal of
2021.
As a result of the move, Target expects to book a $5.4 billion
pretax loss in its fourth quarter ending this month.
Shares climbed more than 3% in morning trading.
Target began opening stores in Canada in 2013--its first
international expansion--and almost immediately faced problems.
Target had committed about $4.4 billion to the effort.
The business, which now has 133 stores and 17,600 employees, has
struggled with a number of operational problems and inventory
issues that have left shelves bare.
For years, Canadians traveled over the border to shop at U.S.
Target stores. But customers have been disappointed by the Canadian
stores' higher prices and the locations, many of which were hard to
access and in rundown shopping centers. The locations were smaller
than Target's typical U.S. formats and took more money than
expected to expand and convert to its trademark red-and-white
layout.
The discount chain originally had told investors that its
Canadian business would be profitable by the end of 2013, but the
division quickly began to bleed cash. Target reported in November
that the division's loss had surpassed $2 billion.
The botched entry into a market that was hungry for Target's
products contributed to the company's decision to part ways with
its chief executive Gregg Steinhafel last year. The company's new
chief executive, Brian Cornell, said Thursday that the decision to
shutter the division came after its holiday performance wasn't
budged by efforts to fix the business.
Target on Thursday received a court order to begin winding down
the business, through which its stores will remain open. Target
said it couldn't estimate its per-share earnings for the current
quarter.
The company also reported its total company sales will be
stronger-than-expected based on its performance in November and
December, driven by increased traffic and digital sales.
Target's results have been improving in recent quarters as the
retailer mends from a multiyear malaise, driven by a massive
holiday data breach and customer disappointment in its merchandise
assortment.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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