Back on Target

15 January 2015 By Kevin Allison

Investors cheered the $50 bln U.S. retailer’s decision to close shop north of the border, where the poorly executed “cheap chic” concept didn’t take hold. At least it wasn’t the current CEO’s idea. That means he can safely take a $5.4 bln pre-tax loss and focus elsewhere.

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Target said on Jan. 15 that it was withdrawing from Canada, ending the $50 billion retailer’s first foray outside its home U.S. market after just two years.

Brian Cornell, Target’s chief executive, said in a statement that an internal review of the loss-making operation had been “unable to find a realistic scenario that would get Target Canada to profitability until at least 2021.” As a result, the company will close its 133 Canadian outlets. Target said its local subsidiary had filed for bankruptcy protection.

The company said it expected to report a $5.4 billion pre-tax loss related to the closure in its fourth-quarter 2014 results, with a further $275 million pre-tax loss on discontinued operations expected in its 2015 fiscal year. Target expects to incur cash costs of $500 million to $600 million related to the closures, most from 2015 onwards.

Target’s shares rose 3 percent in early trading in New York after the announcement.

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