August 23, 2013 Comments

On Thursday the S&P 500 was up 0.9% and Toronto was up 0.8%.

This week Target’s earnings report indicated that its new Canadian stores “contributed” a loss of 21 cents per share. There were also indications that sales were slow and customers were disappointed that prices were higher than in the U.S.

From the start I noted that Target in Canada would not have great prices because for one thing it paid so much for its leases, $1.8 billion paid to take over the Zellers leases, then $10 or $15 million to expand or completely renovate each store. After all of that there was still rent to pay. Target now reportedly expects it may not start making money in Canada until 2015. Some things in business are hard to predict but this seemed reasonably predictable. Though I don’t recall any mention, in Canada’s business news, of the high occupancy costs that Target was facing in Canada.

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