2. The retail chain Target has announced that it will be closing all of its
Canadian stores by May of this year, a mere two years after its
operations in Canada began. This move has many people speculating
about the future of Target and its expansion beyond the United States.
3. As for operations outside of the United States, it is unlikely that
expansion into other countries will continue anytime soon. The stores
operating in Canada were Target's only outlets in a foreign country.
Because of how quickly the chain is making its exit from the Canadian
market, it is fairly clear that further efforts to push into other markets
will not come anytime soon. The chain's business in the United States,
however, has remained strong, making it unlikely that it will suffer
further losses.
4. Financially, Target does not seem to be in severe danger, although the
exit from Canada and the losses associated with it will certainly cut into
profits for 2015. These expenses include the sale of merchandise at a
strongly discounted rate, the payment of employees through the first
week of May, and the likely loss of money invested in the properties
currently occupied by Canadian outlets. These properties, though
valuable, will be difficult to liquidate in the current Canadian economy,
and therefore represent a significant liability. The loss of revenue in the
Canadian market was over $2 billion, making it necessary for the
corporation to cut its losses. Stores in Canada were not projected to be
profitable until 2021.
5. On the whole, the closure of Canadian stores will not be detrimental to the
success of Target in the future. Though there will be financial losses involved,
the chain's business in the United States remains strong. This result is likely
at least in part the result of expanding into Canada too quickly. In opening
over 130 stores in a period of under 2 years, Target took on a very large
liability. In making the move to close the Canadian stores, Target has
protected itself from incurring further losses, and removed a branch of its
operations that would not have become profitable for years to come. While
this decision certainly represents a reduction in the size of the company, it
was likely the wisest move that Target could make given the circumstances to
protect the more profitable sectors of its business. As such, the chain will
likely remain profitable into the future.
6. This post was repurposed for distribution. To read more articles just like
this from Jonah Engler, visit his main website at JonahEngler.com.