Target Corp. is giving up on Canada.
The Minneapolis-based company announced this morning that it will close all of its 133 Canadian stores, affecting 17,600 employees. It was big news for the retailer, which has felt the weight of the unprofitable Canadian division. In the past two years, the Canadian stores have cost Target at least $2 billion.
The company asked the Canadian courts to start liquidation immediately and expects the losses from the closure to come in around $5.4 billion. It was the biggest decision yet facing CEO and Chairman Brian Cornell, who has been on the job for about six months.
“When I joined Target, I promised our team and shareholders that I would take a hard look at our business and operations in an effort to improve our performance and transform our company. 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 Cornell said in a statement.
It’s a welcome move for analysts and investors, who have largely read the closures as a bid by the company to refocus on its stronger U.S. sales and e-commerce platforms. Target’s share prices surged 3 percent in early-morning trading.
“In our view, the decision shows the agility of new CEO Brian Cornell to make appropriate decisions to transform the company. Going forward, we expect the company’s growth will likely be focused toward digital,” said Oliver Chen at Cowen & Co. in a note.