Target is shutting down in Canada.
Target Corp. Chairman and CEO Brian Cornell said Thursday that the company was unable to find a realistic scenario in which the 133-store Target Canada would become profitable before at least 2021. It is Cornell's first major move since becoming CEO in August.
Cornell, who's been tasked with maintaining the retailer's momentum and reclaiming its image as a purveyor of cheap chic fashions and home decor, said it was a difficult decision "but it was the right decision for our company."
"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 U.S. business," he added.
Cornell said Target Canada worked hard to fix its operations and improve its relationship with customers, but that it didn't see the changes it was looking for over the holiday period.
Target entered Canada in 2013. While operations there improved before the holiday season due to changes in pricing and product assortment, Target still wasn't satisfied with its performance.
Target faced problems from the get go when it entered Canada. There are costly regulations, a slow economy and increasing competition. Its experience in Canada hasn't been unique, though. Big Lots Inc. and Best Buy Co. have shuttered stores there and Wal-Mart Stores Inc. has seen its sales in Canada weaken.
The retailer said Thursday that it anticipates approximately $5.4 billion in fourth-quarter losses from discontinued operations in Canada. It foresees about $275 million of losses on discontinued operations in fiscal 2015.
Target expects cash costs for the exit to be between $500 million and $600 million, with most of those costs taking place in fiscal 2015 or later. The retailer said that it has sufficient resources to fund the expected costs.
Target Corp. currently has 17,600 employees at its 133 Canadian stores. It has 1,801 stores in the U.S.