The discount retailer Target Corp. recently announced that it will be closing all its 133 Canadian locations. Target simply can’t compete in the retail space up here. There are less people in all of Canada than in California, so it’s not worth the investment for Target to stay here anymore. Canadian Targets generally offer few products, and at higher prices than in the U.S. Their inventory problems only add to the negative shopping experience. No wonder traffic is slow at Canadian Target stores. It must be frustrating to go buy some soup, but then find out the store is out of stock. 😀
It will cost Target Canada another $600 million to close down for good. 17,600 employees will lose their jobs and will probably have to set up kiosks in the mall to vend for themselves. 😕 At least they will each receive 16 weeks of severance pay.
This is why building up multiple income streams is extremely important. It provides insurance against unemployment. I currently have 4 other sources of income besides my full time job. If I was laid off tomorrow, my other incomes will cover 70% of all my current living expenses. The aim is to get this number up to 100%. I can do this by taking a portion of the money I earn from my full time job, and turn it into an income creating asset such as a private mortgage or dividend paying stocks.
Target Canada Clearance
Target stores will continue to be open during the liquidation process so keep an eye out for reduced prices in the near future. 🙂 I was excited to see Target come into Canada almost 2 years ago. But I suppose it just wasn’t meant to be. As a shareholder I’m glad management has decided to pull out before they lose any more of my money. TGT shares immediately jumped 3% after the announcement was made to leave Canada.
Target’s stock price has performed well since my initial purchase back in 2013. I’m currently up 16% on my TGT investment. At first this might seem like a decent return over a 2 year period. 😀 Many people would be grateful for an 8% annual rate of return. But to be honest it’s actually quite underwhelming. In the world of finance everything is relative. Since I purchased my Target shares, the overall stock market index (S&P500) has climbed 32%. This unfortunately means my investment has underperformed the market. 🙁 Oh well. Win some, lose some. 😕 I believe Target is still a strong company and will recover from its recent mistakes. It still has over 1,800 stores in the U.S. and 366,000 employees worldwide. The dividend yield is 2.8%.
Disclaimer: I’m long TGT. 🙂
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Liquid,
Although I’m not too familiar with Target, it always surprises me how fast a stock shoots up when management decides to cut loose an unprofitable part of business. The same thing happens here in Belgium until the stock then tanks because the trade unions voice their demands. 🙂
Let’s hope at least some of those 17,600 employees have a passive income stream or find a new job soon.
Cheers,
NMW
Hopefully those workers will find other jobs in the retail space eventually. The stores that Target is leaving behind will probably be re-purposed for other businesses. 🙂
Liquid,
I am glad that Target finally decided to cut bait in Canada. I loaded up on shares a year ago and now feel better about the company going forward. The Canada operation was both a drag on the company’s profit and a distraction in general. While I feel for the employees, you hit it on the head about having multiple streams of income. I like to compare it to a plane that has one big engine (the day job) or 4 medium engines (day job plus dividends, rent, interest, side hustles, etc). If one of the four engines stops, the remaining engines can keep the plane in the air.
MDP
Great analogy with the planes. 🙂 Having more engines is definitely the way to go.
Most people already know not to put all their retirement nest egg in one basket. The same can be said about income as well. A diversified income strategy cuts down on risk and gives us multiple opportunities to grow our wealth.
Liquid,
The image above basically is what Target is like. The store at the West Edmonton Mall is 2 floors and it is the bigger store in the mall. The store is at one end of the mall and the mall is 8 city blocks long. Bad location in the mall for sure. People are less likely to go in the store when most of the stores for items they buy are up the other end of the mall. Just imagine what the rent for the West Edmonton Mall store is. Also, the store had higher prices than their US stores , so Canadians will go to Walmart for the cheaper prices here over the Canadian Target stores.
It appears Target has failed to adapt itself to the Canadian audience. Some analysts believe Target might try to come back to Canada again in 2030, with a less aggressive strategy. We’ll see.
Target Canada was completely different from the US Target. It didn’t help that the first CEO mucked up their inventory positioning and they never had anything on the shelves. They would have an amazing promo on but no stock. Not good for business. Glad they’re going, they’re useless in Canada (sad for the employees losing their jobs though).
That last CEO did a terrible job. Trying to open over 100 stores all at once without first testing the waters was a risky move that lost the company billions of dollars. 😐
Too bad I didn’t purchase Target stocks when they were down a while ago. I think Target’s failure in Canada is that a lot of Canadians associate Target with Zellers. Target Canada should have done more advertising and clarify their image.
It also didn’t help that Zeller locations were acquired by Target. Although I think there are still a couple of stores remaining to serve as liquidation centres for other Hudson’s Bay Company retail chains.
Yup, I did a blog post about Target Canada last year how depressing it looked as there were more employees walking around than customers.. I was right on the mark.
Then you saw all of this coming way in advance. Haha, more employees than customers doesn’t sound like a sustainable way to run a business.