Wal-Mart is strengthening its position in Canada by acquiring 13 former Target locations. Minneapolis-based Target made a hasty retreat from Canada last month, after revealing its decision to wind down operations on Jan. 15, subsequently closing all of its 133 stores there under the protection of the Companies’ Creditors Arrangement Act, the Canadian equivalent of the U.S. Bankruptcy Code. Alvarez & Marsal is serving as the court-appointed monitor in the proceedings.
Wal-Mart Canada will take over 12 store leases and one owned location as well as a distribution facility, investing about C$350 million or $289 million to acquire and renovate the locations. The acquisition will add 1.6 million square feet of retail space and 1.4 million square feet of distribution space.
Target spent about $4 billion on its Canadian move. The company’s disappointing financial results were attributed to Target underestimating the complexity of the Canadian market, charging higher prices in Canada than at units across the border in the U.S., chronic out-of-stock issues and stiff competition from Wal-Mart and Canadian Tire, among others.
Also taking advantage of Target divesting its real estate is Toronto-based general merchant Canadian Tire, which said on Wednesday that it has acquired the leases 12 of the Target stores closed in Canada.
In an action subject to approval by the Canadian bankruptcy court, Canadian Tire has agreed to pay 17.7 million Canadian dollars, or approximately $14 million at current exchange, for leases that would add about 400,000 square feet of space to the company’s store network.
“We’ve been tracking certain Target properties for some time and, when the opportunity came up, we moved quickly and secured virtually all of them,” said Michael Medline, president and chief executive officer of Canadian Tire. “We chose 12 properties that fit strategically and financially into our store network.”
Canadian Tire operates about 1,700 retail and gas locations.
Wal-Mart in February said it would open 35 new Supercenters, an investment worth C$340 million, or $281 million. The retailer operates 395 units in Canada, including 282 Supercenters and 113 discount stores.