POLITICS

Target Canada's failure causes retailer to layoff 720 staff in U.S., India

02/11/2015 10:49 EST | Updated 04/13/2015 05:59 EDT
TORONTO - Target Corp. is laying off 720 employees across its global operations as the retailer makes changes linked to its failed roll out in Canada.

The Minneapolis, Mn.-based company said it has told 550 workers in Minnesota they will be losing their jobs — with about 350 of those cuts effective immediately.

Another 170 staff members based at its technology centres in India will be "eliminated over time," the company added.

"The majority of the remaining team members are needed through the closure of the Target Canada stores and their positions will be eliminated following the liquidation period," Target spokeswoman Molly Snyder said in an emailed statement on Wednesday.

Target Canada is in the middle of liquidating its 133 stores and laying off more than 17,000 staff across the country. The U.S. retailer decided to scrap its Canadian stores in January due to lacklustre sales which showed it wouldn't turn a profit for several years.

The sudden pullout from Canada has left several interests, from landlords to pharmacists, voicing concerns over how they will be impacted.

On Wednesday, an Ontario judge gave the green light to a compromise between Target Canada and its landlords over properties the retailer will soon leave vacant.

The revised agreement, which was reached earlier this week but required court approval, gives Target Canada until the end of June to finish selling its store leases.

Both Target Canada and its landlords agreed to have a court-appointed monitor supervise the sale in a deal which shifts control away from the company. The revised deal also addresses landlord concerns that delays could leave unoccupied properties in limbo.

Target has set a May 15 deadline to wrap up the sales process, with an final deadline of June 30 for those deals to close. If the leases aren't sold by then, the rights will be returned to the landlords.

Some of the property owners for retail space leased by Target include RioCan Real Estate Investment Trust (TSX:REI.UN) and Primaris, a division of H&R Real Estate Investment Trust (TSX:HR.UN).

Among other concerns raised during the hearing Wednesday was the fallout of Target closures on the franchised pharmacists who operate at some locations.

A lawyer representing the pharmacists said Target is leaving them without much financial support, with no plans to buy back medication or help to cover the cost of closing and relocating their operations.

William Sasso, a lawyer for the Pharmacy Franchisee Association of Canada, said Target is only focused on closing its stores, which runs against the priorities of the franchisees.

"These pharmacists aren't endeavouring to wind down their operations," Sasso said.

Court documents say franchisees might be able to recover a portion of the inventory costs by reselling drugs to other pharmacies or back to the wholesaler.

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