In a press release, Target Canada announced that it would be filing for creditor protection in a Toronto court and closing down all of its operations across Canada.
Target opened up shop in Canada in spring 2013 to much excitement, CBC reports, but a combination of higher-than-expected prices and a struggling supply line that failed to keep shelves stocked hurt sales.
It apparently lost almost $1 billion in its first year of operation. While it saw that large deficit narrow, CTV reports, to about $211 million, Target executives still couldn’t seem to figure out the formula to success.
Target CEO Brian Cornell previously estimated that Target wouldn’t be profitable in Canada until 2021.
The company’s filing for creditor protection will prevent seizing of its assets. It has set up a $70 million fund to ensure that all of its employees get at least 16 weeks of severance pay. Employees of its Mississauga, Ont., headquarters were apparently greeted by bodyguards.
“Your efforts have been extraordinary, and absolutely nothing about our decision to exit diminishes your hard work and dedication,” Cornell told employees in a Thursday letter, according to a report from CBC.
In total, it will cost the company between $500 million and $600 million to shut down its Canada operations. This will lead to a $5.4 billion writedown in its fourth-quarter earnings. Stores will remain open until Target can complete the liquidation process.
Target had planned, as recently as last March, to expand its Canadian presence, including a massive downtown Toronto store.
