Target Corporation announced on Thursday that it plans to discontinue its operation in Canada in which there are 133 stores, which is owned and operated by wholly-owned subsidiary Target Canada.
Target Canada took steps to make sure of its fair and orderly exit. Moreover, it sought for court approval to start with the liquidation process. Target Canada filed for an application for protection under the Companies’ Creditors Arrangement Act (CCAA).
In the 133 stores in Canada, there are approximately 17,600 people employed. To ensure that the employees are fairly treated, Target Canada seeks court’s approval to voluntarily make cash contributions of approximately $59 million into an Employee Trust. In that proposal, Target would provide a minimum of 16 weeks of compensation, that include wages and benefits coverage for employees who are not required for the full wind-down period.
All Target stores in Canada remain to be open until the liquidation process is finished.
“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. Personally, this was a very difficult decision, but it was the right decision for our company. With the full support of Target Corporation’s Board of Directors, 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,” said Brian Cornell, Target Corporation Chairman and CEO.