In a surprise retreat, Target Corp on Thursday announced that it is going to make an exit from the Canadian market after giving service for less than two years.
The move will result in firing of more than 17,000 employees out of work, triggering a USD 5.4 billion quarterly loss.
In a statement, the company said that it will close all of its 133 stores in Canada saying it expects to report nearly USD 5.4 billion in losses related to pretax for its fourth quarter that will finish at the January-end. The company officials said that the pretax losses were majorly due to the write-down of the Canadian investment along with the operating losses and exit costs.
The shares of the US discount retailer at one point increased more than four percent following the decision. The stock rose 2.2 percent at USD 75.94 in the afternoon trade at the New York Stock Exchange (NYSE).
Target was granted with the creditor protection for its money-losing Canadian subsidiary. Minneapolis-based Target is seen as the number two discount chain across the United States. The firm has severely struggled in Canada since its launch in March 2013.
During its business in Canada, the company had to face huge supply chain problems because of the poor communication mechanism with the headquarters, range of issues at its warehouses and the inexperienced workforce. These were the prime reasons that had left stores poorly stocked, while keeping the selection limited, causing huge disappointment to the shoppers who had highly-anticipated its arrival in a market that was long dominated by Wal-Mart Stores Inc as far as the discount space is concerned.
Even if Target failed to make a mark in Canada, the company said that it would be optimistic about growing in the United States with the expansion of its smaller format stores, which will also include those in big cities.