Target on Thursday announced that it plans to abandon its operations in Canada after the failed expansion attempt cost the discount retailer billions in losses.
"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," said Target CEO Brian Cornell, in a statement. "Personally, this was a very difficult decision, but it was the right decision for our company."
Cornell went on to say that the company had hoped to see an uptick in Target Canada's holiday sales, but that the spike never happened.
The Minneapolis-based retailer is seeking court approval to begin the liquidation process, which is expected to lead to a $5.4 billion writedown.
The announcement is the first significant business decision by Cornell since he took the CEO helm last year, replacing former CEO Gregg Steinhafel, who stepped down following Target's 2013 cyber attack, and the interim CEO John Mulligan.
Target Canada employs 17,000 people throughout its 133 stores across the country. The retailer says it is currently seeking court approval to establish an employee trust somewhere in the range of C$70 million (US $59 million), which would provide nearly all of Target Canada's employees with a minimum of 16 weeks compensation. All stores will stay open during the liquidation process.
On the bright side, Target says it now expects to report fourth quarter 2014 US comparable sales of 3 percent, up from its previous guidance of 2 percent. Much of that is due to Target's gangbuster digital sales in November and December.
The retailer said it experienced record sales on Target.com on Thanksgiving and Cyber Monday, up 40 percent from 2013. Mobile traffic also jumped up, accounting for 60 percent of Target.com traffic from November through December.
Following the Canadian announcement and revised guidance, Target's stock rose 7.5 percent in premarket trading and is set to open at an all-time high.