Target Buys Way Into Canada
Last January, Target formally announced that it would seek
to build a presence outside of the U.S. market, but no sooner than 2013. With
yesterday’s announcement that the chain had agreed to spend roughly $1.85
billion to acquire the leases at 220 Zellers store sites in Canada with plans
to reopen between 100 and 150 of them under its own banner over a two-year
period beginning in 2013, Target is right on schedule.
“This transaction provides an outstanding opportunity for us to extend
our Target brand, Target stores and superior shopping experience beyond the
United States for the first time in our company’s history,” said
Gregg Steinhafel, chairman, president and chief executive officer of Target,
in a statement.
Mr. Steinhafel told The Wall Street Journal that more
than 10 percent of Canadians have shopped in a Target store and 70 percent
are familiar with the brand.
“Target has always been opportunistic about real estate,” Jeff
Klinefelter, an analyst at Piper Jaffray, told the Star Tribune of
a way to accelerate their share in that market and get established very quickly.”
Sozzi, an analyst with Wall Street Strategies, wrote in a research note, “One
word, finally. Not only is Target likely receiving locations where a comparable
cheap chic approach to retailing has been tested, it finally is preparing to
change the dialogue of the company being a U.S. only retailer. Better still,
it doesn’t appear that Target will leverage up its balance sheet to fund
its Canadian foray.”
The chain, which plans to invest another $1 billion
to renovate the sites it is acquiring, moves into the market getting ready
to face a familiar competitor. Walmart currently operates 323 stores in Canada.
Strasser of Janney Capital Markets, according to the Star Tribune report,
sees Walmart as holding the advantage over Target in Canada. Mr. Strasser
wrote in a research note, “Target will prove to be a more formidable competitor
to Wal-Mart than Zellers, which was notorious for poor execution.”
announced that the company’s chief marketing officer, Michael Francis, will
oversee its move into Canada.
“With more than 25 years of experience with this corporation, Michael
has a deep understanding of Target and the retail industry. His responsibility
for corporate brand and reputation including our community relations efforts
uniquely position him to lead this effort,” said Mr. Steinhafel.
news, Target also said it is seeking to sell its remaining credit card receivables.
The company will retain marketing control of its credit card business, which
has gained momentum with the introduction of its five percent discount program
in recent months.
- Target Is Going Abroad — to Canada – The Wall Street Journal
- In a bold push, Target goes international – Star Tribune
- Target Corporation to Acquire Interest in Canadian Real Estate from Zellers
Inc., a Subsidiary of Hudson’s Bay Company, for C$1.825 Billion – Target
- Michael Francis to Oversee Target’s Entrance into Canadian Market
– Target Corporation
- Target in Canada… finally – Financial Post
What is your reaction to Target’s announcement that it is moving into the Canadian market?