Target Canada Closing $5.4 billion pre tax losses benefits Sears, Wal-Mart

Brian Cornell CEO of Target Corporation made a very significant move today, January 15, 2015 - Target Canada is ceasing operations, with final pullout in as soon as 16 weeks; a move that will result in

  • 17,600 layoffs
  • $5.4 billion in pre-tax losses (to be included in fourth quarter 2014 results so 2015 is not affected)
  • 133 store closures (7% of company total leaves it with 1,801 US locations)

reasons given for the decision include

  • Target Canada not forecast to be profitable until 2021 at the earliest - CEO doesn't like this
  • improves total company group results in the short term (same store sales revised up 2-> 3%)

commitments from Target Corporation (TGT)

  • US $175 million to keep the company going until completion of liquidation
  • US $59 employee trust

Brazen Move By A Reputable Company

Canadian results must have been bad for the company to just pick up and leave !  With the Canadian dollar trading at just 83 cents : USD (with another five cent decline possible in the next quarter) Target would have been benefited from low employee costs, other expenses by operating in Canadian dollars.

 

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