Target Corp. is seeking a buyer for its $6.7 billion credit card receivables portfolio, but it plans to retain operational control of its card program because of its “deep integration” with the company’s broader retail operations, the company announced last week.
Certain shareholders have clamored in recent years for the retailer to sell its credit card portfolio, which has seen mixed results.
Target in 2008 sold a 47% stake in the receivables to JPMorgan Chase & Co. Chase retains an interest in the portfolio’s cash flow, but it does not technically own the receivables. Chase declined to comment on how a sale might affect its investment. A Target spokesperson said the structure of any potential deal has not been determined.
Recent improvement in the portfolio’s performance and in the condition of the capital markets might “create an opportunity” to sell the assets, a Target spokesperson tells PaymentsSource. A sale could happen in late 2011 or early 2012, and Target intends to sell all of its receivables, she adds.
Target in April ceased offering its cobranded Visa card to new customers, choosing instead to promote its Red card (
Target reported strong third-quarter earnings for its credit card unit last year and at that time executives said the Red card program has been a hit with customers (
Finding a buyer for the portfolio could prove challenging. Citigroup Inc. and General Electric Co.’s GE Money since 2007 have sought buyers for their private-label card businesses, but demand is at an historic low, analysts say.
Credit card portfolio sales tanked last year, resulting in just 12 deals that fetched an average premium price of 15% above book value, according to credit card consulting firm RK Hammer (
Target has engaged Linthicum, Md.-based First Annapolis Consulting to advise them during the process.
Andrew Johnson contributed to this story.
