Canadian Target Stores to Open Beginning in 2013
MINNEAPOLIS, Jan. 13 /PRNewswire-FirstCall/ - Target Corporation (NYSE: TGT) announced
today that it has agreed to pay C$1.825 billion to purchase from
Zellers Inc., a subsidiary of the Hudson's Bay Company (HBC), the
leasehold interests in up to 220 sites currently operated by Zellers
Inc. This transaction will allow Target to open its first Target stores
in Canada beginning in 2013.
"This transaction provides an outstanding opportunity for us to extend
our Target brand, Target stores and superior shopping experience beyond
the United States for the first time in our company's history," said
Gregg Steinhafel, chairman, president and chief executive officer of
Target Corporation. "We are very excited to bring our broad assortment
of unique, high-quality merchandise at exceptional values and our
convenient shopping environment to Canadian guests coast-to-coast. We
believe our investment in these leases will strengthen the surrounding
communities as well as create strategic and financial value for Target
stakeholders."
Transaction Details
Target has agreed to pay Zellers Inc. C$1.825 billion, in two equal
payments of C$912.5 million, to acquire the leasehold interests in up
to 220 sites currently operated by Zellers Inc. These payments are
expected to be made in May and September of 2011. Zellers Inc. will
sublease these sites from Target and continue to operate them under the
Zellers banner for a period of time.
Target expects to open 100 to 150 Target stores throughout Canada in
2013 and 2014. The financial returns on these stores are expected to be
in line with returns on new Target stores in the United States,
resulting in dilution to earnings prior to store openings followed by
accretion to earnings in the first full year of store operations. These
stores will provide a strong, initial foundation for a more robust
Target presence in Canada over time.
Canadian Economic Impact
Target is excited about the Canadian workforce and expects to create
thousands of jobs for Canadians in the coming years through store
renovations, expansions and new construction as well as subsequent
store operations. Target will initially create opportunities in the
construction industry as it seeks to ensure that each location delivers
a Target-brand shopping experience. Target expects that renovation of
leased sites will result in an aggregate investment of more than C$1
billion. Once remodeled and open, tens of thousands of jobs will be
created to operate the new Target stores. A typical Target store in the
United States employs approximately 150 to 200 team members.
Target has always believed in strengthening the communities where it
does business. Its commitment to donate 5 percent of its income began
more than sixty years ago and extends to each new community it enters.
Today, Target gives about US$175 million annually, or more than US$3
million a week, to support programs that improve the lives of Target
guests, team members and communities. As the company expands its
presence in Canada, it will also extend its 5 percent commitment, long
history of being a good neighbor and active engagement with local and
national partners to help build safer and healthier communities across
the country.
Target Credit Card Receivables
Target also announced today that it intends to actively pursue the sale
of its credit card receivables portfolio, which totaled US$6.7 billion
as of October 30, 2010. First Annapolis has been engaged to advise
Target in this process.
Target believes that improved portfolio performance, the successful
launch of its REDcard Rewards program, and conditions of the capital
markets create an attractive opportunity to engage interested parties
regarding a possible sale of these assets. In addition to an
appropriate financial arrangement, Target intends to execute a
transaction in which it would retain operational control of its
strategically important financial services business, including its deep
integration with Target's retail operations. Additionally, a
transaction would be expressly designed to have minimal impact on
Target's guests or the Target team members who provide financial
products and services to them.
Target intends to execute a transaction only if appropriate strategic
and financial conditions are met. Any proceeds to Target resulting from
a potential transaction would be net of existing third party interests
in the portfolio.
Forward-Looking Statements
The statements on the expected earnings impact resulting from the HBC
transaction, the number and timing of Target store openings in Canada,
the expected capital expenditures associated with any store openings
and the nature of a potential credit card receivables sale are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements speak only as of the
date they are made and are subject to risks and uncertainties which
could cause the company's actual results to differ materially. The
most important risks and uncertainties include: (i) the risk that the
transaction may not close on the expected timeline; (ii) the risk that
the new stores may not be integrated successfully or that the
integration may be more costly than expected; (iii) the risk of
expansion into a country where we have not previously had retail
operations; and (iv) the risks described in the Risk Factors
sections of the company's Form 10-K for the fiscal year ended January
30, 2010 and the Form 10-Q for the fiscal quarter ended July 31, 2010.
About Target
Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,752
stores in 49 states within the U.S. and at Target.com. In addition, the
company operates a credit card segment that offers branded proprietary
credit card products. Since 1946, Target has given 5 percent of its
income through community grants and programs; today, that giving equals
more than US$3 million a week. For more information about Target's
commitment to corporate responsibility, visit Target.com/hereforgood.
SOURCE Target Corporation