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Target to close all 133 stores in Canada, laying off 17,600

In this March 5, 2013 photo, a Canadian flag flies on the car of a customer's car parked in front of a Target store in Guelph, Ontario. On Thursday, Jan. 15, 2015, Target said it plans to exit Canada, citing the company didn't foresee operations being profitable there until at least 2021. (AP Photo/The Canadian Press, Dave Chidley) CPT105
In this March 5, 2013 photo, a Canadian flag flies on the car of a customer's car parked in front of a Target store in Guelph, Ontario. On Thursday, Jan. 15, 2015, Target said it plans to exit Canada, citing the company didn't foresee operations being profitable there until at least 2021. (AP Photo/The Canadian Press, Dave Chidley) CPT105
Published Jan. 15, 2015

OTTAWA

Less than two years after opening in Canada, Target said Thursday that it would close its 133 stores in the country, laying off 17,600 people. The Canadian operation was also placed under bankruptcy protection.

Although Target stores in the United States were long popular destinations for Canadian visitors, the discount department store struggled to translate its formula to Canada. Differences in suppliers and other factors meant that Canadians found Target's Canadian stores to be more expensive than they had anticipated, and a poorly executed distribution network meant that shelves were often missing basic products.

In May, Target fired the chief of its Canada unit, two weeks after the company's CEO, Gregg W. Steinhafel, resigned.

"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," Brian Cornell, Target's chairman and CEO, said in a statement.

The first Canadian stores opened in March 2013, but most have been in operation for about a year. Under Mark Schindele, who became the president of Target Canada in May, the Canadian operation widely acknowledged its shortcomings in the news media and on social media, and some improvements seemed to be developing at the stores.

David Soberman, a marketing professor at the University of Toronto, noted that it usually takes operation at full strength for more than a year for businesses to find success in new markets, but he faulted Target for using internal management with no international experience to run the company's first foray outside the U.S.

"The result was basically problems that when you're teaching first-year classes at universities you tell students no business should do," Soberman said.

Target expects to report a pretax loss of $5.4 billion related to the closing in the fourth quarter of 2014, plus $275 million more this year. As part of the bankruptcy filing, the company is proposing to set up a $59 million trust fund to provide employees with a minimum of 16 weeks of severance pay.

Associated Press (2013)

A Canadian flag flies on a customer's car parked in front of a Target store in Guelph, Ontario. Target is exiting Canada entirely, filing for bankruptcy protection there and saying it didn't foresee operations being profitable until at least 2021.

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