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10 big international exits by retailers

It’s easy to understand why international expansion is tempting for retailers eager for hot markets to sustain their growth rates.

Target (TGT) thought the same in 2011 when it bought store leases from a dying Canadian discount chain as a quick way to open 124 stores in its first international market, one where archrival Wal-Mart Stores (WMT) gets $20 billion a year in sales. But as Target learned, international markets can be very tough to crack, even Canada, a market supposedly very similar to the United States. Target has announced it is exiting Canada and taking a $5.4 billion write down on a business which has also incurred more than $2 billion in operating losses, to better focus on its home market.

Other retailers, American and international, have also followed the yellow brick road abroad only to exit after the going was tough.

Here are just a few of the many examples of retailers exiting from once-promising markets in recent years.

1 Best Buy exits China a year after pulling out of Europe (2014)

SHANGHAI, CHINA – FEBRUARY 22: (CHINA OUT) A person walks past a Best Buy logo on February 22, 2011 in Shanghai, China. U.S. consumer electronics retailer Best Buy Co. Inc. has closed all nine outlets on the Chinese mainland, plus its regional retail headquarters in Shanghai, according to a statement on the company’s website Tuesday. (Photo by ChinaFotoPress/Getty Images)

Best Buy (BBY) announced in December it would sell its struggling China operation, Five Star, to a domestic real estate firm so it could better focus on North America, still by far its biggest market. Best Buy had struggled with local competition in a crowded market that nonetheless had been generating about 4% of sales. A year earlier, Best Buy had left Europe when it sold its stake in Carphone Warehouse Group, losing half of its initial investment. And it 2011, it had closed 11 Best Buy stores in China.

2 Home Depot exits China (2012)

A trainer gives last minute instructions to the staff prior to the opening of US home improvement chain Home Depot’s first outlet in Beijing, 26 August 2007. Home Depot, the world’s largest home improvement retailer, is expecting low profits for the foreseeable future because of intense competition, low average family incomes and high distribution costs, but hopes to gain long-term as Chinese residents become richer and China’s cities swell, as 400 million people — more than the entire US population — are expected to move from rural to urban areas by 2030, feeding an unprecedented construction boom. AFP PHOTO (Photo credit should read AFP/AFP/Getty Images)

Home Depot (HD) made a rare stumble when it entered the Chinese market in 2006 by buying 12 local stores, underestimating how much cheap labor made ‘do-it-yourself’ skills less important for home improvement in that country. So in 2012, the retailer decided to cut its losses and close its seven remaining big-box stores. The retailer ended up taking a $160 million write down.

 

3 Office Depot says adios to Mexico in 2013

A pedestrian passes by advertising in the window of an Office Depot Inc. express store in Mexico City, Mexico, on Wednesday, June 26, 2013. Grupo Gigante SAB a Mexican owner of office-supply stores, agreed to buy half of a joint venture from Office Depot Inc. for 8.78 billion pesos ($690 million) in cash earlier this month. Grupo Gigante shareholders are scheduled to meet on June 27 to vote on approval of the transaction. Photographer: Susana Gonzalez/Bloomberg via Getty Images

Office Depot (ODP) said in June 2013 that it would sell off its half of a Mexican joint venture to Grupo Gigante for some $690.2 million, after facing pressure from an activist investor to exit the business. The venture operated almost 250 stores in Mexico and Central America, with sales exceeding $1 billion.

4 Wal-Mart exits Germany (2006)

BERLIN – MARCH 2: A woman walks past a Wal-Mart store March 2, 2006 in Berlin, Germany. According to March 2 news reports Wal-Mart suffered losses totaling in the lower hundreds of millions of Euros for its German operations in 2005. (Photo by Sean Gallup/Getty Images)

Wal-Mart Stores (WMT) had hoped Germany would give it a toehold in continental Europe but in 2006, after eight years of trying, it found itself unable to make a profit in the continent’s biggest economy. The discount retailer said it would sell its German operations to rival German retailer Metro. At the time, Wal-Mart said it expected to incur a pretax loss of $1 billion on the deal.

5 Tesco exits U.S (2013)

Shopping bags for sale are pictured inside a Fresh & Easy store in Burbank, California October 19, 2012. Tesco’s billion pound gamble to crack the U.S. may have only months to run as investors and management focus more squarely on the British retailer’s struggling home business and slowing growth in emerging markets. Fresh & Easy (F&E), having absorbed nearly 1 billion pounds ($1.6 billion) of capital since its 2007 launch, remains stubbornly loss-making in the cut-throat U.S. grocery market where it competes with larger rivals. Picture taken October 19, 2012. To match story TESCO-FRESH&EASY/ REUTERS/Mario Anzuoni (UNITED STATES – Tags: BUSINESS FOOD) – RTR39OBE

Tesco, the gigantic British supermarket chain embroiled in an accounting controversy, threw in the towel in 2013 on its efforts to finally succeed in the U.S. by selling most of its Fresh & Easy chain to Yucaipa, an investment company owned by American supermarket billionaire Ron Burkle. The moved ended a six-year foray into the U.S. he world’s third-largest retailer built Fresh & Easy from scratch, but never managed to make a profit. A year earlier, Tesco had exited Japan.

 

6 Carrefour leaves India

Shopping trolleys line up at the entrance of the Carrefour hypermarket in Brive-La-Gaillarde, central France, July 8, 2013. France is the biggest country in Europe for hypermarkets and the store’s growth mirrors Carrefour’s past global expansion. But that growth masks the gradual decline of the format. The hypermarket – an out-of-town warehouse of more than 2,500 square metres which offers everything from camembert cheese to lawn mowers – is shrinking as online vendors, convenience shops and discounters meet many of the needs of a cash-strapped, increasingly fragmented population. Picture taken July 8, 2013. REUTERS/Regis Duvignau (FRANCE – Tags: BUSINESS LOGO) – RTX127ZL

The French retailer, world’s second largest after Wal-Mart, said last summer it would shut down its operations in India less than four years after opening its first store in the country. It was the latest departure from underperforming markets so Carrefour could focus on Europe, China and Brazil. Carrefour had operated five “cash-and-carry wholesale stores” aimed at professional customers in India.

7 Ralph Lauren exits Argentina (2012)

TO GO WITH AFP STORY BY JOSEFA SUAREZ
A placard informs about the temporary closure of the Ralph Lauren main store on Alvear avenue in Recoleta, one of the wealthiest neigborhoods in Buenos Aires, on August 9, 2012. Many international brands are closing their branches due to the problems to import merchandises caused by the strict money exchange control enforced by the government of President Cristina Kirchner. AFP PHOTO/Juan Mabromata (Photo credit should read JUAN MABROMATA/AFP/GettyImages)

Ralph Lauren (RL) exited Argentina in 2012 after 13 years, closing a Buenos Aires flagship and two other stores as the retailer founded itself encumbered by import barriers, restrictive red tape, currency troubles and a big drop in tourism to that country. Ralph Lauren’s move came as other luxury brands headed for the Argentinean exits—Yves Saint-Laurent left that year too after 30 years in the South American country.

But there may have been other considerations. A year later, in 2013, Ralph Lauren agreed to pay about $1.6 million to resolve charges under the U.S. Foreign Corrupt Practices Act that the fashion company had made payments and gave gifts to foreign officials—including perfume, dresses and handbags—between 2005 and 2009 that amounted to bribes.

8 Borders bookstores says ta-ta to Britain (2007)

UNITED KINGDOM – FEBRUARY 25: Customers browse in a Borders bookstore in a mall on Liverpool Road in the borough of Islington, London, U.K., Saturday, February 25, 2006. Photographer Adrian Brown/Bloomberg News (Photo by Adrian Brown/Bloomberg via Getty Images)

The now-defunct U.S. bookstore chain Borders had made a foray into Britain in a vain attempt to build a trans-Atlantic empire. But by 2007, as sales were starting to weaken at home, it decided to exit its biggest major international market, where it had come in 1998 and bought a local chain, eventually operating 42 Borders superstores there. Borders soon after got out of other international markets, including Australia, and ultimately went out of business in the U.S. in 2011.

9 New Look says ‘Do svidaniya’ to Russia

A shopper selects an item of clothing at a New Look store on Oxford Street, London, U.K., on Friday, Feb. 5, 2010. New Look Group Plc, the U.K. women’s fashion retailer that was taken private in 2004, plans to raise 650 million pounds ($1 billion) by selling stock in an initial public offering to cut debt and fund expansion. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

British fashion retailer New Look said in November it had exited Russia and Ukraine because of political uncertainty there, months after saying it would put a planned expansion in the once-promising Russian market on hold. “All retailers are having an extremely tough time in Russia, not just in clothing,” Anders Kristiansen, chief executive of New Look, told the Financial Times.

10 Out of Venezuela for Clorox

FILE – In this file photo made Feb. 1, 2010, Clorox bleach bottles are posed for a photo in Moreland Hills, Ohio. Household products maker Clorox Co. said Tuesday, Aug. 3, 2010, its fourth-quarter net income was nearly flat, even though its revenue rose 1 percent, because it paid higher taxes and had smaller margins. (AP Photo/Amy Sancetta, file)

Consumer brands have also exited some countries. Clorox (CLX) said in September it was leaving Venezuela because inflation and government-mandated price freezes prevented it from making a profit. Struggling beauty company Avon Products (AVP) has in recent years left markets such as South Korea and Ireland to shore up its business in more promising markets.