Target Puts Card Receivables Up for Sale
Target’s announcement last week that it had reached a deal
to move into Canada took up much of the headline space for the retailer. It
was far from all the big news coming out of Minneapolis, however.
which has gone back and forth on selling its credit card receivables in recent
years, has decided to do just that. According to the Star Tribune,
Target has hired First Annapolis to help it find a buyer for its $6.7 billion
Target sold 47 percent of its card business, then valued at
$8.1 billion, to JP Morgan Chase in 2008. At the time, CFO Doug Scovanner,
equated it with the Dire Straits song “Money for Nothing.”
intends to maintain operational control of its REDcard business. In October,
the company introduced an automatic five percent discount on all purchases
made in its stores and on Target.com for consumers using the card. The retailer
has said it expects the card to add one to two percent to same-store sales.
Klinefelter of Piper Jaffrey told the Star Tribune, “Now’s
a good time to go ahead and do it (sell receivables) and become entirely focused
Discussion Question: Do you agree or disagree with Target’s decision to seek a sale of what remains of its credit card receivables?