Target to Sell Half of Card Portfolio
Target Corp. reported yesterday it plans to sell half its $8.6 billion credit card portfolio for about $4 billion to an unnamed investment partner. The giant Minneapolis-based retailer reported the deal could close during the second quarter.
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The sale was propelled by investor William Ackman who bought 9.6 percent of Target last July. Target announced last September ("Target Could Sell $7 Billion Card Portfolio: Report" Sept. 12, 2007) it was looking for a buyer for the portfolio that provided $404 million of its net revenues of $19.9 billion in its fiscal fourth quarter ending Feb. 2.
Receivables in portfolio were $8.6 billion at the end of the quarter. Net write offs tallied $132 million in the fourth quarter, or 6.4 percent of average receivables.
Target’s bank Retailers National Bank issues its Target Visa card and Target Red Card. Few retailers still issue their own cards, preferring to sell off their portfolios to retail card divisions of financial giants such as HSBC, GE and Citi.
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