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Target Calling it Quits in Canada

Target Corp. made the surprise announcement this morning that it will cease operations in Canada and close its 133 stores there, a move that could put its 17,600 employees in the country out of work.

The company said it has filed for bankruptcy for its wholly-owned Canadian subsidiary, Target Canada Co.

The U.S. discount retailer has struggled since its 2013 launch north of the border, beset by supply chain problems, empty store shelves, prices that were too high, and disappointed customers.

In its most recent fiscal quarter, Target Canada’s operating loss narrowed to $211 million (U.S.) from s $238 million loss a year earlier while sales jumped 43.8 per cent to $479 million from $333 million. Canadian same-store sales gained 1.6% in the period.

Target’s U.S. sales were $17 billion in the third quarter, with pre-tax earnings of $927 million.

For the first nine months of 2014, the Canadian division’s operating loss was $627 million, wider than the prior year period’s loss of $612 million. The division’s gross margin rate was 19 percent in the nine-month period, compared to almost 30 percent for the U.S. stores.

The company said in November that results at the unit were well below expectations, and that it would review the future of its losing Canadian business after the holiday season.

It said stores would remain open during liquidation, and that with court approval it would pay all of its Canadian employees a minimum of 16 weeks of compensation.

The move will leave Target with 1,800 stores, all of which are in the U.S.