DENVER — Protests over Target Corp.’s handling of its acquisition of Zellers Inc. properties in Canada dimmed the mood of the U.S. discounter’s annual shareholder meeting Wednesday.

This story first appeared in the June 13, 2013 issue of WWD. Subscribe Today.

The Minneapolis-based retailer is guarded about business for the near term after slashing its second-quarter outlook. Speaking to shareholders inside a new, but bare, store location at 7777 East Hampden Avenue that will be unveiled next month, Gregg Steinhafel, chairman, president and chief executive officer, said, “We have a cautious view for the near term. First-quarter sales [of $498 million] fell short of our expectations.”

Steinhafel said the weaker performance was due in large part to soft sales in weather-related categories and the federal payroll tax increase that went into effect earlier this year.

The meeting took place as a crowd of 80-plus protestors assembled in the store’s parking lot, upset over the reported firing of thousands of employees of Zellers when Target paid $1.8 billion to acquire leasehold interests for more than 200 Zellers sites in 2011. Most of those will become Target stores. Workers union UFCW Canada said it has anecdotal evidence that only 1 or 2 percent of the former Zellers employees have been rehired at Target stores.

Responding to one of a handful of proxy shareholder questions regarding the controversy, Steinhafel said Target has hired “hundreds of Zellers employees” but would not disclose more specific hiring data. “We did not terminate any Zellers workers,” Steinhafel said, adding that 1 percent was a “theoretical number someone made up.”

Protestors wore red “Fairness to Zellers Workers Now” T-shirts with white lettering, presumably to mimic uniforms worn by Target employees. “Target refused to acknowledge the fact that they fired 25,000 workers in Canada,” spokesman Kevin Shimmin, national representative for UFCW Canada, told the group immediately following the meeting. “They tried to say that they made a real-estate transaction and had no responsibility to any of those people.”

Having already opened 48 units this year, Steinhafel said Target plans to have 124 LEED-certified stores in all 10 Canadian provinces by yearend.

Target spokesman Joshua Thomas said apparel continues to be an important business for Target, which on June 30 will launch a line from Lauren Bush Lauren and FEED Projects, an organization that fights world hunger. A collaboration with 3.1 Phillip Lim will follow this fall.

“Design collaborations have, and will continue to, play a critical role in differentiating Target and building excitement around our brand,” Thomas said. Apparel and accessories are 19 percent of Target’s overall annual sales, according to the annual report distributed at the Denver meeting.

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