Saturday, January 17, 2015
Target Closing it's Doors
The company launched March 2013, less then 2 years ago, and already the major retailer is shutting it's 133 doors, and leaving 17, 600 employees jobless.
But the question on everyones mind is why? Canadians always travelled far, and crossed boarders, just to shop at Target, and with it right down the road, all of a sudden it becomes a place we drive past.
When Target moved in, it made a few major
errors, when it first opened the shelves were quite empty, with major distribution problems, and to accompany the empty shelves were high prices, much higher then Canadians anticipated.
In their first year open Target lost almost $1 billion dollars, and although their loses have been less this year, and with their promise in July that they we're devoted to Canada, they ultimately decided it was best for the company to close it's doors.
"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" explained CEO Brian Cornell.
On Thursday Target filled out an application in Toronto, for protection under the Companies Creditors Arrangement Act, and it was approved. This helps companies that can't pay their debts, the ability to reconstruct their company, without this it allows creditors to seize their assets. Closing it's shop in Canada means it allows the company to redirect their attention to their U.S stores, which have also been struggling.
Most of Target's locations were from existing Zellers leases, but the company does own some real estate in Canada. It is estimated that after they sell their space they will account for $1.2 billion of their loses.
The company is seeking out to set up a $70 million dollar fund in order to ensure that the employees affected get 16 weeks of severance pay.
Target is the most recent retailer to go under in what is becoming a very hard retail environment in Canada. Fashion stores such as Mexx, Smart Set and Jacob have all recently announced plans to close their doors in the coming months.