Target's (NYSE:TGT) struggles since entering the Canadian market have been well documented, and now one analyst is speculating that the big box chain could leave the market soon.
According to a report from CIBC Capital Markets, Target could be looking to put an end to its business in Canada. Target "has been a disaster in Canada, producing sales at about half of our initial projections and running deep operating losses," Perry Caicco, CIBC analyst told Supermarket News.
The report stated that Target must either decide to invest more to improve operations or to sell to another operator.
Target entered Canada in 2013, following the acquisition and conversion of former Zellers sites and operates 130 stores there. The company experienced a rocky expansion in Canada, and finished its first year in Canada with a fourth-quarter operating loss of $329 million. After admitting to the slow start, the company announced new initiatives in an attempt to improve pricing and merchandising. The president of Canadian operations, Tony Fisher, was even fired in May.
Caicco reported that there are few visible improvements in stores today. The shelves are not stocked much better and the pricing and value do not make sense. He expects the stores in Canada will likely stay open through 2015, but the chain may seek a sale to another retailer after that.
However, Target told Supermarket News that the report was only one analyst's opinion.
"Target's focus is on driving improvements to the business, and as we have shared previously, we look forward to continuing to assess our progress, the work ahead, and the opportunity in the Canadian market. With the fourth quarter just around the corner, our teams are focused on ensuring we offer guests an exceptional shopping experience this holiday season," the company wrote in a statement to Supermarket News.
-See this Supermarket News article
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