MONTREAL 2015 (AFP) - American discount retailer Target announced Thursday its exit from Canada, after a highly-anticipated but ultimately disastrous launch only two years earlier.
The Canadian subsidiary of the Minneapolis-based firm, which has filed for bankruptcy protection, will close all of its 133 stores across the country and leave 17,600 employees out of work.
"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 was named chief executive officer only six months ago.
"With the full support of Target Corporation's board of directors, we have determined that 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 US business," he said.
Target was among the first of a wave of US retailers opening stores in Canada recently that also included Nordstrom, Saks and J. Crew.
The slew of stores ranging from big box out of town outlets to high end department stores have been plotting ambitious growth north of the Canada-US border.
The allure was in part higher sales per square foot in Canadian malls compared to their American counterparts in recent years.
Canada is also viewed as an arguably easy first step for American retailers looking to expand abroad, due to its proximity and strong similarities in Canadian and US consumer tastes.
But Target admittedly bungled its move north right from the start, disappointing customers with store shelves half-stocked at its grand opening, and uncompetitive pricing compared to its US stores.
It also faced stiff competition from already established US brands such as Costco and Wal-Mart, which came to Canada in the 80s and 90s, respectively.
And Canadian retailers such as Canadian Tire, Loblaw and Sobey bulked up in anticipation of Target's arrival, adding more stores or buying up rivals to boost their operations and product offerings.
Cornell said Target Canada had "worked tirelessly" to fix its operations.
"We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance," he added.
The parent company said it now expects to post a pre-tax fourth quarter loss of US$5.4 billion due primarily to a write down of its investments in the Canadian subsidiary, along with costs associated with the exit and liquidation of assets in Canada.
It said it expects to also post another US$275 million loss in 2015 on the discontinued Canadian operations. But it added it hopes to bounce back by the end of the year.