Despite Losses, Target Continues Canadian Expansion
Target announced Wednesday that it is continuing its expansion into Canada with nine additional stores, which are expected to open throughout 2014.
The Minneapolis-based retailer has opened 124 stores in Canada since moving into the country last March. When it first opened its three pilot Canadian stores, the retailer received some push back from customers who felt the prices were higher than they expected. Since then, Target Canada has delivered an underwhelming performance that had a negative impact on Target’s overall profits.
For Target’s most recent financial quarter, which ended November 2, its earnings were below expectations due mainly to losses related to its Canadian expansion. Target opened 32 stores during the quarter, 23 of which were in Canada.
That quarter, Target’s profits were hit with a loss of $0.29 per share from its Canadian segment. Excluding that impact, the company would have seen earnings of $0.84 per share, which would be 6 percent lower than during the same period last year, as opposed to 46 percent lower, when including the Canada operations.
Despite its trials, the company remains confident in its northern expansion and is now planning to open five new stores in Ontario, one in Alberta, one in British Columbia, one in Quebec, and one in Manitoba. Target said it plans to open three in the spring, three in the summer, and three in the fall.
“The past year marked a major milestone for Target as we delivered on the unprecedented goal of opening 124 Target stores across 10 provinces in 2013,” Tony Fisher, president of Target’s Canadian operations, said in a statement. “As we head into 2014, we will continue to enhance the guest experience at all stores, while continuing to expand our presence in new Canadian neighborhoods.”
The company said it employs about 150 people at each of its Canadian locations, and it intends to hire that many for the nine it announced today.
Earlier this month, Target announced plans to open 10 new stores throughout the United States but also close 12 others.
Closer to home, Target recently said that Minneapolis will be home to the smallest Target in the country when it opens its first “TargetExpress” store near the University of Minnesota. The store will be about 15 percent the size of typical Target locations, only taking up about 20,000 square feet, and will stock a mix of grocery and pharmacy items as well as basic clothing and electronics.
Meanwhile, Target is still recovering from its recent massive data breach, which affected 70 million holiday-season shoppers. Soon after the breach, the company cut about 475 positions—including an undisclosed amount from its Minneapolis headquarters.
Target operates 1,921 stores—1,797 in the United States and 124 in Canada.