U.S. discount retailer Target Corp. is shutting down its Canadian operations in one of the biggest liquidations in Canadian history.

The company announced early today it plans to liquidate its 133 stores in Canada, and its Target Canada division has filed for an orderly shutdown under the federal Companies' Creditors Arrangement Act.

The move is a blow to the Canadian retail sector and the Ontario economy. The Mississauga-based retailer has 17,600 employees and has been a major presence in cities across the province since it entered the country in 2011.

Target Canada stores will remain open during the liquidation process as the company sells its real estate, inventory and other assets over the next year or so.

Brad Duguid, Ontario’s minister of economic development, employment and infrastructure, said he is "extremely disappointed" by the retailer's planned shutdown.

"My thoughts are with all of those impacted by this news," he said in a statement.

"Our government will work with Target Canada and all levels of government to provide affected employees with transition training, and monitor the court proceedings closely to see what decisions are made, and the direct impact they have on Ontarians."

Duguid said "job creation and economic growth remain a priority of this government, and we will continue working to create an inviting business climate to attract investment and create new jobs."

The liquidation is among the biggest in Canadian corporate history and reflects the cutthroat competition in the retail market, where discounters, grocers, drug stores and specialty retailers are all competing for a tight-fisted spending consumer.

Since buying the leases of up to 220 Zellers stores for $1.8 billion from Hudson's Bay Co. in 2011, the retailer has faced a rocky road in the retail market. It began operations in Ontario less than two years ago and has failed to compete effectively with its main rival, Walmart Canada, and posted billions in losses.

The recent Christmas holiday sales were also weaker than expected in Canada, the company said.

"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," said Brian Cornell, Target Corp. chairman and chief executive officer, in a statement before stock markets opened.

"Personally, this was a very difficult decision, but it was the right decision for our company. We have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business."

The Minneapolis-based parent company said the costs of shutting down its Canadian division are expected to be US$500 million to $600 million. As well the company is taking a US$5.4 billion writedown on its books for the Canadian shutdown.

For workers, the retailer said it is putting C$70 million into a special trust fund to provide nearly all the company's 17,600 Canadian employees with a minimum of 16 weeks of wages, benefits and severance.

As part of the liquidation process, Target Canada is seeking the appointment of Alvarez & Marsal Canada as monitor in the CCAA proceedings to oversee the liquidation and wind-down. The retailer is also asking for bankruptcy court approval to hire Lazard to help sell its stores and real estate assets.

Some locations may be of interest to Walmart or other retailers but many are expected to close permanently.

"The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests," Cornell added. "We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance."

"There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way."

Target operates 1,934 stores – 1,801 in the United States and 133 in Canada, including 55 in Ontario.

Target announces complete pullout from Canada

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