The Great White North has given Target a great black eye.
On Jan. 15, the retailer announced plans to liquidate its 133-store Canadian division, after a two-year fiasco that cost the company billions.
The Minneapolis-based retailer launched the division in 2013, assuming more than 100 leases that once belonged to liquidating discount chain Zellers. But the down-market Zellers locations and stores were an uncomfortable fit for the “cheap chic” department store, analysts said.
The branch also struggled with inventory issues and inconsistent pricing, CEO Brian Cornell admitted in a company blog.
“[We took] on too much too fast,” he said. “[W]e delivered an experience that didn’t meet our guests’ expectations, or our own.”
An anonymous employee in an email to Gawker agreed the retailer’s expansion plans were “too aggressive,” resulting in shelves that were often embarrassingly empty.
“Target had to open 124 stores in less than one year, but they also had to open three national distribution centers to service those stores,” the person wrote. “[Supplying] the distribution centers with the ‘right’ product (e.g., what stores actually needed) was an afterthought.”
The Daily Mail dubbed one understocked Canadian location “the most miserable store in North America,” adding its disorganized appearance “resembled a flea market.”
While the retailer struggled to turn things around, initial negative impressions turned out to be “too much to overcome,” Cornell admitted, noting he didn’t see the division turning profitable until 2021.
The Canadian arm currently employs 17,000 people, who will receive a minimum 16 weeks’ pay after they are terminated.
“Personally, this was a very difficult decision, but it was the right decision for our company,” said Cornell.
The retailer will take a $5.4 billion write-down on its Canadian division in its fourth quarter results.