Jan. 15--After a brief stint in Canada, Target Corp. announced Thursday that it would close all of its 133 stores there and lay off nearly 17,600 employees.
The Minneapolis-based retailer expanded into Canada two years ago, but has struggled to turn a profit, racking up substantial losses.
In a statement, Chief Executive Brian Cornell said it was the right decision for the 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," Cornell said.
Cornell said that with the company ceasing operations in Canada, it would seek court approval to make voluntary cash contributions of $59 million into an employee trust to give its 17,600 employees in Canada at least 16 weeks of compensation.
Target said pre-tax losses on discontinued operations would amount to approximately $5.4 billion in the fourth quarter of 2014, driven primarily by the investment in Canada, and an additional $275 million in fiscal 2015.
The company had troubles from the outset when it began its aggressive push into the Canadian market two years ago. Most notably, it stumbled by opening too many stores and not always keeping those stores stocked with key products, analysts said. In addition, they said, prices were on average higher at Target stores in Canada than those in the United States.
Still, the company expects the move to increase its cash flow in fiscal 2016, according to a release.
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UPDATES
3:09 a.m. This post was updated with additional background.
This post was orginally published at 7:19 a.m.
