Target posts Q-4 loss on Canadian pullout

Target Corp. delivered a cautious profit outlook Wednesday despite a loss in its fourth quarter, dragged down by costs to end its money-losing foray in Canada.

But the discount retailer recorded stronger-than-expected sales during the holiday period as shoppers bought more clothing and other items.

The results, which included a second consecutive increase in a key sales measure in a year, come a little more than a month after the discounter announced it was giving up on Canada and focusing on revving up its U.S. business.

The closing was the first major move by CEO Brian Cornell, who took over last August charged with reclaiming the retailer’s image as a purveyor of cheap chic fashions.

Target Canada is in the midst of liquidating its 133 stores while a court-appointed monitor supervises the sale of most of the leases on the properties.

The company made the decision to leave Canada in January, after lacklustre sales meant it wouldn’t turn a profit for several years.

The decision to exit the country will leave more than 17,000 staff across the country without jobs, while a number of groups, including landlords and pharmacists, have voiced concerns over how they will be affected.

The company lost $2.6 billion, or $4.14 per share, in the three months ended Jan. 31. That compares with a profit of $520 million, or 82 cents per share a year earlier.

Excluding costs to exit Canada and other one-time items, Target’s adjusted earnings were $1.50 per share. Analysts polled by FactSet expected $1.46 per share. Target is now liquidating all 133 stores after entering Canada just two years ago.

Revenue rose 4.1 per cent to $21.7 billion. Revenue at stores opened at least a year rose 3.8 per cent. The measure is considered a key indicator of a retailer’s health.

“The exit from the Canadian market will meaningfully improve our credit metrics going forward,” chief financial officer John Mulligan said on a conference call with analysts.

“Provided the wind down of our Canadian operations continues to push ( forward) as planned, we will be in a position to revisit the possibility of a share repurchase later in 2015.”