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Retail

Target’s loss is Wal-Mart’s gain in Canada

Phil Wahba
By
Phil Wahba
Phil Wahba
Senior Writer
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Phil Wahba
By
Phil Wahba
Phil Wahba
Senior Writer
Down Arrow Button Icon
May 8, 2015, 11:52 AM ET
Target Corp. to Abandon Canada After Racking Up Billions in Losses
Shoppers exit a Target Corp. store with their shopping carts n Toronto, Ontario, Canada, on Thursday, Jan. 15, 2015. Target Corp. will walk away from Canada less than two years after opening stores there, putting an end to a mismanaged expansion that racked up billions in losses. Photographer: Kevin Van Paassen/Bloomberg via Getty ImagesPhotograph by Kevin Van Paassen — Bloomberg via Getty Images
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One big-box retailer’s disaster is another’s opportunity.

Wal-Mart Stores (WMT) said Friday it will buy 13 of the stores previously operated in Canada by Target (TGT) before it exited that market in April after a disastrous 26-month foray.

Last month, Target closed the last of its 133 stores in the Great White North — ending an ill-advised international expansion that cost the discount retailer $7 billion — so it could focus on revitalizing its U.S. business under new CEO Brian Cornell, as detailed in a recent Fortune cover story.

Target’s departure allows its bigger rival more breathing room in a highly competitive market, and the chance to expand.

In its most recent quarter, Wal-Mart reported comparable sales fell 1.7% in Canada, while the number of shoppers who came into its stores fell 2.7%. What’s more, Wal-Mart saw its gross margin profit fall as it lowered prices to face off stiff competition, including from Target as it made one last attempt to make it in Canada during the holiday season.

Wal-Mart is spending about $290 million to buy and renovate these stores as well as one distribution center in Canada, where the world’s largest retailer already operates 395 stores, making it one of its largest international markets.

“This agreement helps us accelerate our growth plans ensuring more Canadians have access to our low prices,” Dirk Van den Berghe, President and CEO of Walmart Canada, said in a statement.

All the price cuts last quarter appeared to pay off for Wal-Mart: its market share in Canada edged up about half a percentage point, according to Nielsen data the company cited, something in can build on with its nemesis now out of the country.

Wal-Mart in February announced a $415 million capital investment plan designed to increase store count and strengthen its e-commerce. For a list of former Target locations Wal-Mart is buying, click here.
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About the Author
Phil Wahba
By Phil WahbaSenior Writer
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Phil Wahba is a senior writer at Fortune primarily focused on leadership coverage, with a prior focus on retail.

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