About 17,600 people will likely be out of a job after Target Canada announced the closure of 133 stores across the nation.
The closures, announced by Target Corporation on Jan. 15, will affect about 100 employees at the Gates of Fergus store on Tower Street at the south end of Fergus.
Centre Wellington economic development officer Patricia Rutter said she was suprised by the announcement.
“I’m disappointed that they’ll be leaving town,” Rutter said. “It’s a loss of that kind of multi-sector merchandiser here.”
Target Canada received approval for protection under the Companies’ Creditors Arrangement Act on Jan. 15 and will contribute $70 million into an employee trust, a press release states.
All eligible Target Canada employees will receive at least 16 weeks of compensation, including wages and benefits for those not required for the full “wind-down period.”
After operating for less than two years in Canada, Target decided to close its 133 stores due to the likelihood that they would not be profitable in the next six years.
“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,” Brian Cornell, chairman and CEO of Target Corporation, said in the press release.
Target expects to report about $5.4 billion worth of pre-tax losses in discontinued operations in the fourth quarter of 2014, and $275 million this year, as much of the $500- to $600-million cost of shutting down Canadian operations will be borne in 2015 and beyond.
“The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests,” Cornell said.
“We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance.”
For many communities, the Target closures bring to memory the fall of Zellers in 2013, except for one fundamental difference: it appears there are no Target-like department stores ready to swoop in and take over the retail space.
“The problem is there is no other retailer in that sort of mid-size department store right at the moment,” Rutter said.
“I’ve been trying to think of other merchandisers … what we could do with that kind of space, because it is a large store.”
This not only poses a problem for the potential use of the retail space, but it also presents challenges for employees.
When Zellers closed, Rutter said she thought employees were encouraged to apply to Target.
“Most people knew that Target was moving in so it was really just a lag in time for those employees,” she explained.
With Target closing in Fergus, approximately 100 people could be without jobs. If the space remains part of the retail sector, those individuals could potentially find employment there.
However, at this point, there does not appear to be any pending plans for the building, said Rutter, adding Target held a special place in the community.
“We were one of the first stores that Target opened and I think there was a certain amount of pride in that … and we were one of the first smaller-market stores,” Rutter added.
There is currently no defined timeline for Target store closures, but the company website states they will remain open throughout the liquidation period, which usually lasts about 16 to 20 weeks.
Other store locations closing in the Waterloo-Wellington area include: Stone Road Mall in Guelph, Cambridge Centre in Cambridge, Laurentian Power Centre in Kitchener and Conestoga Mall in Waterloo.
