01/15/2015 08:37 EST | Updated 03/17/2015 05:59 EDT

Target Canada files for creditor protection, plans to close all stores

Target says it plans to discontinue all operations in Canada and seek protection from creditors, less than two years after opening to much fanfare.

In a release early Thursday, the U.S. retail chain said it will close all its locations in Canada. There are 133 stores across the country with about 17,600 employees.

The company launched in Canada in the spring of 2013.

But after high expectations, the chain failed to deliver right out of the gate as customers faced higher-than-expected prices, and empty shelves as the retailer had problems with its distribution chain.

Target lost almost $1 billion in its first year in Canada, and while the losses have shrank since then, the chain is still losing money daily.

Executives repeatedly promised they would get it right, but ultimately decided to pull the plug.

"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," CEO Brian Cornell said in a release Thursday, explaining the justification for the shutdown.

Target says it filed an application in a Toronto courtroom for protection under the Companies’ Creditors Arrangement Act.

The federal law allows companies that can't pay their debts the ability to restructure themselves. Without it, the companies and individuals that an insolvent company owes money to can technically start seizing assets. But because Target has applied under CCAA, that won't happen here yet.

The company says it is setting up a $70-million fund to ensure all employees affected by the move get at least 16 weeks in severance pay. The stores will remain open while the company completes the liquidation process.

"Your efforts have been extraordinary, and absolutely nothing about our decision to exit diminishes your hard work and dedication," Cornell told employees in a letter on Thursday, a copy of which has been obtained by CBC News.

Employees at the company's Mississauga, Ont., headquarters were greeted by bodyguards when they showed up for work on Thursday.

Target said the decision to close shop in Canada will cost between $500 million and $600 million in cash from the U.S. parent's bottom line, but results in a writedown of about $5.4 billion from an accounting perspective in the upcoming fourth-quarter earnings.