Target Lays Off Hundreds In Twin Cities, India
Target Corporation is expected to lay off about 550 Twin Cities employees and 170 in India as part of its exit from Canada, according to the Star Tribune.
“This is a difficult day for the Target team but we continue to believe that the steps we are taking are the right ones for the company,” a company spokeswoman told the newspaper in a statement.
Such layoffs have been expected for nearly a month as the Minneapolis-based retailer announced in January that it was closing all of its 133 stores in Canada and that more than 17,600 workers would also lose their jobs—roughly 17,000 of which are based in Canada.
About 350 Twin Cities employees will be laid off today while the rest will continue with Target until the Canadian stores are closed around May. The 170 tech positions being eliminated in India supported Target’s Canadian operations. Affected employees will stay on the payroll for at least 60 days and receive severance packages based on their years of service.
After losses in Canada crept past $1 billion, Target decided to cease operations there once it realized operations would not be profitable until at least 2021.
Also this week, Target Canada reached a deal with its landlords over its lease-sale process, likely avoiding bankruptcy as it works to liquidate its 133 Canadian stores. The Globe And Mail reported that Target responded to landlords’ concerns by setting May 15 as a deadline to liquidate the stores, with deals to be concluded no later than June 30. Landlords want a swift conclusion to the process so they can regain control over properties that were designed as anchor mall tenants.
Target’s exit from the Canadian market created an opening for Wal-Mart Stores Inc., which said Wednesday that it would spend $270.1 million to build 29 new supercenters and expand its distribution network in the country.
Target will report its fourth-quarter earnings on Feb. 25. Target expects to report about $5.4 billion of pre-tax losses on discontinued operations in the fourth quarter of 2014 and said it will spend between $500 million and $600 million in exiting Canada. Target applied for protection under the Companies’ Creditors Arrangement Act, a Canadian law that that allows companies that can’t pay down debt to restructure. It is also seeking approval from the Ontario Superior Court of Justice to “voluntarily” make cash contributions of roughly $59 million to an employee trust that would provide most Target Canada-based workers at least 16 weeks’ severance pay and benefits.
Earlier this month, the company a new direction for upcoming stores: it said it plans to open more smaller- and mid-size stores this year than its traditional big-box store. Eight TargetExpress and one CityTarget locations are in the works. TargetExpress is the company’s smallest format at around 20,000 square feet. The first such location opened in the Dinkytown area of Minneapolis in July 2014 and another is planned in St. Paul’s Highland Park neighborhood in addition to locations in California, Chicago and Washington, D.C.