At Last, Target Dumps Credit Card Business
Big-box retailer Target Corp. (NYSE: TD) today announced that it has agreed to sell its credit card business to TD Bank Group (NYSE: TD) for the value of its receivables, currently about $5.9 billion. In January, the retailer failed to…
Target will retain the servicing of its REDcard rewards program and its Visa card accounts. The sale includes only the loan portfolio. Under the agreement, TD will for seven years “underwrite, fund and own future Target Credit Card and Target Visa receivables in the United States.”
TD and Target will share the profits from the portfolios, with Target getting the larger piece, presumably to offset the servicing costs.
Target expects to report a third quarter pretax gain of about $150 million as a result of the sale and at closing expects to recognize an additional pretax gain of $350 to $450 million. The sale is expected to close in the first half of 2013.
Target’s shares are down about 0.3% at $62.05, in a 52-week range of $47.25 to $65.80.
TD’s shares are down 1.4% at $82.58, in a 52-week range of $65.20 to $86.56.
Paul Ausick
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
