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Target announces rescue plan for Canadian stores

MINNEAPOLIS — Target Corp. on Wednesday announced changes to its flailing Canadian operation, which lost nearly $1 billion last year, to reverse perceptions of high prices and empty shelves.

“We know we still have work to do, but the entire Target team is focused on continuous improvement so that Canadian guests will have the Target experience they deserve,” Mark Schindele, president of Target Canada, said in a statement.

Schindele was appointed to oversee Target’s Canadian operations in May after the division’s previous leader was fired amid disappointing results with Target’s first major international expansion. It opened about 125 stores in Canada last year and a handful there this year.

But Target had trouble keeping those stores supplied and customers complained its Canadian prices were higher than its U.S. stores and many of its Canadian rivals.

The Minneapolis-based retailer cut its profit outlook for the second quarter last week, citing in part softer-than-expected sales in Canada, despite taking steeper markdowns to clear out excess inventory.

Among the changes, Target said it physically counted inventory in all stores and reset its systems, paving the way for more accurate ordering and shipping data. It also plans to improve the allocation of products based on sales history. And it will expand its price-matching policy to more retailers and let customers point out competitors’ lower prices at the checkout rather than at the guest services desk.

“With the addition of our price match guarantee, and our 5 percent off every purchase with a Redcard, guests should be confident they’re getting the best price at Target,” Schindele said. Redcard is Target’s credit- and debit-card service.

Target also is planning new merchandise initiatives, including a long-term partnership in home decor with Canadian celebrity designer Sarah Richardson in fall 2015.

It also said it would expand its maternity assortment by 50 percent in September and will bring Nick & Nora, a popular U.S. women’s fashion line, to Canadian stores next year. In total, Target said it would be bringing more than 30,000 items to its Canadian stores between now and Christmas.

David Strasser, an analyst with Janney Capital Markets, recently visited Target’s Canadian stores and came away somewhat upbeat about Target’s ability to turn around its operations. He said Target’s initiatives seem logical and “highlight a path forward.”