Target Can Concentrate On Target Now

Discussion
Jul 30, 2004
George Anderson

By George Anderson

Yesterday’s announcement by Target Corporation that it had agreed to sell the Mervyn’s department store chain to an investment consortium for approximately $1.65 billion in cash means the retailer can now do what it has said it wants to do — focus on its discount store and supercenter business.

Mike Scott, a retail broker with United Properties, the Bloomington-based commercial real estate firm, told the Pioneer Press, “I’m sure they’re popping the champagne corks at Target headquarters right now.”

While no official announcement was made on the popping of champagne corks, Target spokesperson Carolyn Brookter said, “There’s no question we wanted to sell Mervyn’s as an ongoing business. That was one of our goals going in.”

Target’s chairman and chief executive, Bob Ulrich said in a pre-recorded announcement, “We believe that the sale of Mervyn’s as an ongoing business reflects our long-term commitment to create substantial value for our shareholders over time and enhances the opportunity for all of our stakeholders, including our team members, guests and communities, to enjoy continued success for many years.”

Moderator’s Comment: What will the sale of Mervyn’s mean for Target and Mervyn’s?

Normally, this is the time we’d pull out the “be careful what you wish for” adage but, in the case of Target, we’re pretty sure the company will do fine
having gotten it.

As for Mervyn’s, look for a scorched earth plan to be put in place to turn the business around. The consortium buying the chain includes Sun Capital Partners,
Inc., Cerberus Capital Management, L.P., and Lubert-Adler/ Klaff and Partners, L.P.

Sun Capital, as many know, is the same firm that closed 150 stores when it bought Sam Goody last year.
George Anderson – Moderator

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