CFN– Target is shutting down its stores in Canada with approximately 17,000 staff losing their jobs.
Here in Cornwall Ontario Eleven Points Distribution hires approximately 250-400 people locally. The massive facility of 170 acres was supposed to employ nearly 1,000, but Canada never embraced Target after it acquired many of the former Zeller stores.
Eleven Points referred queries to Lisa Gibson, but their Canadian phone number had already been disconnected and there was no answer or voice mail at the US number given by local staff.
Cornwall, already suffering from the economic loss of the Call Distribution industry moving many jobs offshore does not have a replacement industry ready to go.
If Loblaws does not use its option on the land it has in play more promised jobs will not be filled.
Target Press Release
Target Corporation Announces Plans to Discontinue Canadian Operations
Target Canada takes steps to ensure a fair and orderly exit, seeks Court approval to begin liquidation process under the CCAA
Company provides update on fourth quarter performance in the U.S.
MINNEAPOLIS, Jan. 15, 2015 /CNW/ – Today Target Corporation (NYSE:TGT) (the “Company”) announces that it plans to discontinue operating stores in Canada through its indirect wholly-owned subsidiary, Target Canada Co. (“Target Canada”). As a part of that process, this morning Target Canada filed an application for protection under the Companies’ Creditors Arrangement Act (the “CCAA”) with the Ontario Superior Court of Justice (Commercial List) inToronto (the “Court”).
“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.
Target Canada currently has 133 stores across the country and employs approximately 17,600 people. To ensure fair treatment of Target Canada employees, Target Corporation is seeking the Court’s approval to voluntarily make cash contributions of C$70 million (approximately US$59 million) into an Employee Trust. Upon approval by the Court, the proposed trust would provide that nearly all Target Canada-based employees receive a minimum of 16 weeks of compensation, including wages and benefits coverage for employees who are not required for the full wind-down period. Target Canada stores will remain open during the liquidation process.
As part of its application, Target Canada is seeking the appointment of Alvarez & Marsal Canada as Monitor in the CCAA proceedings to oversee the liquidation and wind-down process for Target Canada and its subsidiaries. Subject to Court approval, Target Corporation has committed to provide a US$175 million debtor-in-possession credit facility to finance Target Canada’s operations during the CCAA proceedings. Target Canada is also seeking Court approval to engage Lazard to advise Target Canada in connection with the sale of its real estate assets.
“The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests. We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance,” said Cornell. “There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way.”
As a result of the CCAA filing, Target Corporation has determined that Target Canada and its subsidiaries will be deconsolidated from Target Corporation’s financial statements as of the date of the filing. Target Corporation expects to report approximately $5.4 billion of pre-tax losses on discontinued operations in the fourth quarter of 2014, driven primarily by the write-down of the Corporation’s investment in Target Canada, along with costs associated with exit or disposal activities and quarter-to-date Canadian Segment operating losses prior to today’s filing. Target Corporation expects to report approximately $275 million of pre-tax losses on discontinued operations in fiscal 2015.
Target Corporation’s cash costs to discontinue Canadian operations are expected to be $500 million to $600 million, most of which will occur in the Company’s 2015 fiscal year or later. The Company has sufficient resources to fund these expected costs, including cash on hand and ongoing cash generation by its U.S. business.
Target Corporation expects this decision will increase its earnings in fiscal 2015 and beyond, and increase its cash flow in fiscal 2016 and beyond.
As a result of the decision announced today, Target Corporation will operate as a single segment that includes all U.S. operations. Beginning with the Company’s fourth quarter 2014 financial results, Target will report adjusted earnings per share reflecting operating results from its U.S. operations, excluding discontinued Canadian operations, the impact of the reduction of the beneficial interest asset recognized in connection with the 2013 sale of the Company’s U.S. consumer credit card portfolio, net expenses related to the 2013 data breach, and the resolution of certain tax matters.
Target Corporation plans to provide additional information on the financial implications of this announcement in a Form 8-K to be filed with the Securities and Exchange Commission later today.
Update on expected fourth quarter U.S. performance
Based on performance through November and December, Target Corporation now expects to report fourth quarter 2014 U.S. comparable sales of approximately 3 percent, better than prior guidance of approximately 2 percent, driven primarily by increased traffic and stronger-than-expected digital sales. The Company expects to report fourth quarter adjusted EPS, reflecting results from continuing operations, of $1.43 to $1.47, about 6 cents ahead of expectations for U.S. Segment performance at the beginning of the quarter.
The Company is not able to provide an estimate of its expected fourth quarter 2014 GAAP EPS. However, GAAP results are expected to include:
- Losses related to liquidation of Target Canada, as described above, net of taxes
- Net expenses related to the 2013 data breach, which are not expected to be material
- Impact of the reduction of the beneficial interest asset recognized in connection with the 2013 sale of the Company’s credit card portfolio, which is expected to reduce GAAP EPS by approximately 2 cents
Cornell and John Mulligan, Target Corporation’s Chief Financial Officer, will host a call with investors today, approximately two hours after the conclusion of the Court hearing of the CCAA application. Target Corporation will issue a press release following the Court hearing and post details for the call on target.com/investors under “Upcoming Events and Presentations.”
Statements in this release regarding expected earnings and cash flow and other financial impacts of exiting the Company’s Canadian operations, and fourth quarter 2014 sales and adjusted earnings guidance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertainties which could cause the Company’s actual results to differ materially. The most important risks and uncertainties include those relating to the consequences of discontinuing Canadian operations and the risks described in Item 1A of the Company’s Form 10-K for the fiscal year ended February 1, 2014, as updated in the Company’s Form 10-Q for the quarter ended November 1, 2014.
The adjusted earnings per share expectation for fourth quarter 2014 excludes the items identified above. The Company’s measure of adjusted earnings per share is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The most comparable GAAP measure is diluted earnings per share. Management believes adjusted EPS is useful in providing period-to-period comparisons of the results of the Company’s U.S. operations. Adjusted EPS should not be considered in isolation or as a substitute for an analysis of the Company’s results as reported under GAAP. Other companies may calculate adjusted EPS differently than the Company does, limiting the usefulness of the measure for comparisons with other companies.
Minneapolis-based Target Corporation (NYSE: TGT) serves guests at 1,934 stores – 1,801 in the United States and 133 in Canada – and at Target.com. Since 1946, Target has given 5 percent of its profit to communities, that giving equals more than $4 million a week. For more information, visit Target.com/Pressroom. For a behind-the-scenes look at Target, visit ABullseyeView.com or follow @TargetNews on Twitter.
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Target is leaving. This means more Walmarts. Do we really need more Walmarts in Canada?
As for Loblaws….maybe they could buy the Target warehouse. I know they have an option on land in the industrial park. But does it make sense for Cornwall to have a warehouse the size of Target’s to sit empty and for Loblaws to build a new one?? Nope.
This is devastating news indeed! Where will we go to buy junk now?
Hugger do you remember that you and I were having a discussion about Target leaving I think it was last year and I turned out to be right. We go to Billings Bridge in the mornings during the winter now to walk inside and we go through Target because we park at the back of the store and honest to God Hugger there are very few people and more staff than customers. The customers are a tiny trickle and you cannot keep rents going and utility bills and business taxes and pay employees their minimum wage and not have people purchasing. Target in Canada is not the same Target as what is in the US – it is only Zellers #2 = junk to the hilt at a higher price. Nordstrom has gone under in the US and so has JC Penny. Nordstrom is a high end store and they were going to put it at Rideau Centre and people shop for bargains and not high end even the rich people shop for bargains.
Target closing in Canada is just the tip of the iceberg of slowdowns happening across the American retail sector:
Harry our mall over the border in Massena is not doing very well and if Cornwall Square loses Sears they are in dire straits. Online shopping has changed the way we buy things, just like online news has changed the way we consume information.
Hate to doom and gloom but I do agree Harry Valentine. This summer will be a focal point I predict in our attempt to embrace, understand and move forward with the Digital Age. Insulate your portfolio from traditional investing mistakes by looking at the European model. We are years behind trends that are history there but yet to be written future here in North America. Great years for opportunity to make significant gains. Think in terms of the have to “have” and not the “wish” to list and you will do well in my opinion. This strategy has never let me down. I could really not care what the interest rates are, to fickle a sector for me. Investing in GIC’s after adjusting for inflation leaves you in negative growth territory and how do you retire on that? I believe that we are entering a long 25 year cycle of payback for prior excesses, I hope that I am wrong however so far preparing for the worst has been rather fruitful. I only hope that more people plan for tomorrow before it arrives.
Mr. Valentine I am going to click into your Lew Rockwell and I like the man very much and listened to a lot of good things from this man. Here it goes and take care.
No matter. Team Cornwall and the city “economists” will still tout it as a great achievment of recent years at the next Galaxy Theater rub and tug.
Maybe they can all go out to Alberta to the high paying…wait.
Wow Alberta is laying off at Suncor oil and even BP in England is laying off as well. It is all over the alternative media where I go for news. I look at at least 3 and more places for alternative media and all are saying the same things including about our Canada and Target and Keystone, etc. Hard times are coming and I don’t just say that as words on the screen this is mighty serious.
Jules you’re so negative. Look at the good government jobs that will be created processing all those unemployed people.
It’s the end of the retail world as we know it
It’s the end of the retail world as we know it
It’s the end of the retail world as we know it & we don’t feel fine.
Target closure: ‘Very bad news for Cornwall’
Some corp types should buy this 1.4 million sq ft facility and build flying cars. We had a gem with the Avro Arrow lets show the world we can do it again. Canada needs flying cars to rise above the crust of mundane things like gun violence and parking lot fees ; long hospital waits and fear of your E.I running out. This reporter saw plans for flying discs just recently released by the Canadian Government. I say rise again the plans Canada once had for market domination of aero space tech.. Like George Jetson once said ” Mr Spacely > I am sorry I’m Late.
LOL LOL. Wow Team Cornwall is a real joke and Cornwall itself is a joke across the country. People in Cornwall you haven’t seen anything yet.
I think the Target failure in Canada has a lot to do with Target not realizing that Canada is a different economic setup. A lot of American retailers thik they’ll just pop over the border without realizing Canada IS different, it is not an extension of the U.S.A.
I don’t know where you get your info Jules, but neither Nordstrom or JC Penney has gone under.
As for the oil prices and workers being laid off it was bound to happen. Has the bubble burst? Iraq said whoever was responsible for the oil price donbturn will suffer. Just what we need another god punishing us for not paying their greedy oil prices.
I agree with Elliot. Pretty much everything, except food, can be ordered on line and delivered to your door for a lower cost than actually shopping at a store. Some will still “go shopping” for entertainment, but that activity is on the decline. It was absolute insanity for Target to set up in Canada when the market for junk stores was already over-saturated. Too bad about the lost jobs, but did anyone expect them to last?
Hugger, American and British oil companies control the Iraq oil production and export. That was the the whole purpose of the Bush/Blair invasion.
Wait a minute I have to check if there are any WMD’s under my desk. Gee there are none SHUCKS! Furtz you are absolutely right and that is why this ISIS war is on as well is because of oil and the entire economy which is coming down. It is also who is going to rule the world if you remember the old song. Wait and see what is going to happen and it is going to be a real shocker to the entire world. People have seen nothing yet.
It’s amazing what one letter does. I should have said Iran, not Iraq.
Hugger Iran was not invaded and Iran deals with Russia and China. Iran are the Persians and they have nuclear weapons and if anything would ever happen the world would be in for a huge surprise. That is why you see Nitanyahu on pins and needles and needling Obama to go after the Iranians. Iran is not Arabian but Persian of the Persian Empire of long ago.
Jules. Are you preparing for the impending “second coming” and “Rapture”, or just the meltdown of the world economy? They’ve both been predicted for some time. Pretty sure the economic meltdown will happen first.
ADMIN you are absolutely right on! In addition, look at all the higher paying jobs involved with the administration of welfare handouts as the number of recipients with little or no prospect of finding meaningful employment grows within our little community. Spinoff after spinoff until everybody simply stays at home and….
Iran = Russia = China.
Todd of CSN says Target closing is probably a silver lining. It’s time he realized it isn’t. Perhaps the jobs lost will be sucked up by Loblaws. But that doesn’t put Cornwall any further ahead getting more people employed in Cornwall. Some people bitch about the over abundance of distribution centre jobs here. But when you’re unemployed any job is better than no job.
Hugger. It looks like the “free world” economy is about to be brought into line by those who want a bigger piece of the pie. China can easily bankrupt North America just by calling in the loans. Interesting times ahead.
Todd is busy kissing up to City Hall which sadly pays if you look at the ad bucks given to them via say boycotting CFN which has immensely more viewers than the CSN. They’re not even close.
Furtz I would agree that the meltdown will occur first. Think of it like this…in the last 200 years or so we have grown from 1 billion to quickly approaching 7.3 billion. This period of industrialization has rapidly created an increasing interdependence amongst nations. This economic pitfall has arranged countries to fall like a dominos chain reaction. The goods news is that if this modelling proves correct than after the chain reaction takes its toll and world recession levels the playing field we can simply start the whole process over again. Joy joy happy happy.
I like your optimism David. But sadly as usual, the people at the bottom of the food chain who have no control of the situation will suffer the most.
Furtz there is no rapture maybe rapture of the church. If you recite the prayer “The All Father” it has to do with heaven coming down to earth – Jesus has a mighty big cleaning up to do in everything. People do not go to heaven up in the sky – we are born to live on the land.
I meant the Our Father prayer. I haven’t been dipping my beak into the sauce and I still screw up badly. LOL LOL. ROLF! Maybe it is because I laugh so much and can’t type straight.
Furtz the meltdown of the economy will come first and the other thing is WWIII. If WWIII goes ahead with nuclear the world is toast. In the Bible it talks about 1/4 of the world will die. This is one of the things that I have been worrying about for a long time and not only that but the world leaders are all mighty concerned.
Nobody knows when Jesus will come back but He sure will come back. This world has all gone completely nuts.
Didn’t Brad Pitt already win WWIII? No that was WWZ or something…never mind…we’re still here..right…or is this Heaven on Earth Jules.
Furtz there is a clearance place across from the hospital in Winchester on the main drag that usually has some good junk!
When Target took Zellers all the Zellers employees were ditched. Now Target is ditching the people that they have and according to what I read today Sears will be absorbing some of them and giving discounts to them on their purchases. Well WHIPEE! When Sears is in big trouble economically as well there is no silver lining. MEXX is gone including many others. There are no jobs to be found and the situation is mighty serious.
Sears is more interested in Target’s head office employees than the on-the-floor sales representatives. Sears was very sly about how they worded their press release. By offering “discounts” to ex-target employees they also boost their sales figures. There ARE jobs available. You just have to willing and able to want the jobs. Most people will not lower themselves to the jobs available as they see the jobs below them. When you’re unemployed your attitude should be any job until I find what I’m qualified for.
Hugger this is one of the times that I will not just put you at 100% right but 1000% if that exists right. My daughter lost her job in an office and the company did contracts. Today that company only does call centre contracts. My daughter along with her co-workers all left and they took a buy out package and she went on unemployment and now working as a cashier in a super market and yes it is way below what she did but at least it is something and only part time. She is at work now and finishes at 4 today – it is all shift work. You have to take anything to survive even here in Ottawa, Toronto and anywhere else. Honest work is not beneath you at all. My daughter is not used to the public and she along with her co-workers take a lot of abuse from the public and the kind of public that you would not want to be bothered with and I don’t have to explain since you are all intelligent enough to know what I am taking about. Hugger you are very intelligent and yes we get into debates but you do raise a great deal of good points. You nailed it this time all the way which is the complete truth.