Target Rolls to $60, Ready to Sell Card Unit & Focus on Retail Biz

Target Corporation (NYSE:TGT) has been trying to sell its credit card segment for some time now. The segment’s Q3 revenues reported a decline of 8.2% from the prior-year quarter to $348 million. However, the credit card segment’s profit grew about 10% due to a steep fall of around 64% in bad debt expense. The improved economic conditions resulted in prompt credit card payments by customers. With its anticipated credit card segment sale, the company can focus on its core business – retailing. Target is the second largest retailer in the U.S. after Wal-Mart (NYSE:WMT) and competes with Best Buy (NYSE:BBY), Macy’s (NYSE:M), Sears (NASDAQ:SHLD), and Costco (NASDAQ:COST).

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Credit Card Segment Sale Expected Soon

The company has confirmed that it’s looking to sell its credit card segment. In January 2011, it hired an adviser to pursue the sale of its $6.7 billion credit-card receivables portfolio. Target is expected to receive a portion of the cash from the deal, and the balance will go to JPMorgan which owns a 47% interest.

We believe if this sale materializes, it will let Target focus on its core business of retailing and help it explore various channels to reach targeted customers. The company is keen to expand its online retail presence, and in this regard, it launched a new website this year to boost online sales. (See Target Launches New Website to Drive Online Sales) Retailing is becoming a broad-based business spanning online and offline platforms. Hence it’s a constant challenge for retailers like Target to devise innovative ways to lure customers that have more options to select from and are more aware about products and their pricing thanks to Internet and technology.

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