Target mulls sale of credit card assets
Home & Textiles Today Staff -- Home Textiles Today, September 13, 2007
Minneapolis – Target Corp. will “review potential ownership alternatives” for its $7 billion credit card receivables, saying today its review with the help of Goldman Sachs will be complete by the end of December. The review will also entail re-evaluating its use of debt in its capital structure and its pace of share repurchases.
While financial analysts often question some retailers’ dependence on credit card receivables, Target has been in the crosshairs of major investor William Ackman of Pershing Square Capital Management, who in July called Target stock “undervalued” and said it sought “to discuss with management ways in which this undervaluation can be corrected.”
Target said it is one of the 10 largest issuers of credit cards in the United States, and believes that the credit card business helps “drive incremental sales, deepen our relationship with our guests and reinforce our brand," said Bob Ulrich, chairman and ceo.
Target cfo Doug Scovanner noted that the Target receivables portfolio has “a unique combination of attributes which include strong double-digit growth, a consistently high yield and unprecedented integration with our retail operations.”
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