Mad Money

The dumbest move Target ever made

Cramer: What to do with Target's stock
Cramer: What to do with Target's stock

It is official Cramerica, Jim Cramer has confirmed that you can't parachute into a country, dump 133 ready-made stores and expect them shoot through the roof with success overnight.

Target, unfortunately, learned this the hard way with Canada.

"It is proven to be one of the dumbest moves ever, not just in retail, but in any business I follow," the "Mad Money" host said.

Customers arrive at a Target store in St. Albert, Alberta, January 15, 2015.
Dan Riedlhuber | Reuters

On Thursday morning, Target's new CEO, Brian Cornell, announced that the retailer is calling it quits in Canada and will close all of its stores. The company employs approximately 17,600 employees there.

Cornell said the Canadian stores would not have been profitable until 2021, thus prompting the decision to pull out. This on the back of racking up $7 billion in Canadian dollar losses, $4.5 billion in opening costs and $2.5 billion in operating costs. All which were incurred prior to Cornell joining Target.

Former CEO Gregg Steinhafel's regime left a legacy inclusive of the massive data breach and now the monumental losses in Canada.

"To some degree he rivaled Ron Johnson, the man who almost totaled J.C. Penney, in an ill-fated bid to reinvent the stodgy retailer," Cramer added.

Simply put, Canada is not the U.S. They are two different animals. To expect that opening so many stores in another country and assume they'll be profitable is ludicrous. As a comparison, Nordstrom took the smart approach of opening just one store in Canada and monitoring further progress before opening additional shops.

Now the question remains—what do you do with Target's stock?

Buy it! Cramer said to buy some now, and more if the company heads lower. He believes that Cornell has the moxie to be able to restore the store back to its glory days, and take the stock along with it.

In the end, Cramer would never want to celebrate laying off all those employees in Canada. But he thinks it was a necessary and bold move, and the right thing to do for shareholders.

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"Who knows what this retailer can accomplish under Cornell now that Canada's closed and the data breach is in the rearview mirror."

Cramer says that with Target jumping back into the U.S., there is simply no other place for the stock to go but up.

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