Bloomberg News

Target Revamps Canada Lineup to Rescue Troubled Expansion

August 13, 2014

Target CEO Brian Cornell

Brian Cornell, a PepsiCo Inc. executive, is Target Corp.'s first outsider chief executive officer. Photographer: Beth Hall/Bloomberg

Target Corp. (TGT:US), looking to fix its Canadian operations after a money-losing expansion into the country, is revamping the product lineup, improving supplies and teaming up with celebrity designer Sarah Richardson.

The move follows a review of the Canadian business this year, the Minneapolis-based company said today in a statement. In addition to releasing Richardson-designed products next year, Target Canada is expanding its maternity and cosmetic products and will roll out an exclusive brand of household cleaners called Better Life.

Canadians, who for years shopped at Target just over the border in the U.S., were unimpressed by its expansion into the country. They found prices at the local stores were higher, while the retailer failed to keep enough merchandise in stock. Target said today it will begin matching rivals’ prices and better the supply chain in a bid to change that impression.

“You’ve got to have more local and regional taste in Canada than just thinking you can go out there and open U.S. stores with a bunch of U.S. brands,” Brian Yarbrough, an equity analyst at Edward Jones in St. Louis who rates the stock a buy, said in a phone interview. “It’s got to resonate.”

The shares fell 0.3 percent to $58.26 at the close in New York, extending a 7.9 percent decline this year.

The Canadian division, which lost $941 million before interest and taxes last year, has been a headache for a company already reeling from a hacker attack during the holiday season of 2013. Mark Schindele, who was senior vice president in charge of merchandising operations, replaced Tony Fisher as head of the Canadian business in May.

CEO Change

The move was part of a broader shake-up at the company, which tapped PepsiCo Inc. (PEP:US) executive Brian Cornell as its new chief executive officer in July. Gregg Steinhafel, who had been Target’s CEO for about six years, resigned in May.

Richardson, who will offer a line of home decor in the fall of 2015, is a Canadian interior decorator known for hosting shows on the HGTV network.

Target said it plans to bring 30,000 new items to its Canadian stores by Christmas, including more options from Beaver Canoe, an arm of Roots Canada Ltd., this fall. Next year its Canadian shoppers will have access to Nick & Nora, a popular U.S. women’s fashion line, the retailer said.

The store chain is pledging to make sure its shelves stay stocked in Canada by better forecasting and adjusting delivery schedules.

To improve convenience for shoppers, Target is enabling them to use smartphone applications such as reebee and Flipp for price matching, instead of having to track down offers and bring in printed flier. Customers will also be able to match prices from the Canadian websites of Amazon.com Inc. and Wal-Mart Stores Inc. among other online retailers.

“If we see a like item priced higher at Target, we’ll lower it,” Schindele said in the statement. “Guests should be confident they’re getting the best price.”

To contact the reporters on this story: Nick Turner in New York at nturner7@bloomberg.net; Jaime Myslik in Toronto at jmyslik@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Carlos Caminada, Will Wade


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Companies Mentioned

  • TGT
    (Target Corp)
    • $75.63 USD
    • 0.57
    • 0.75%
  • PEP
    (PepsiCo Inc)
    • $96.32 USD
    • -0.73
    • -0.76%
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