Target (NYSE: TGT) announced today that it would delay its attempt to sell its
credit card portfolio. The company had announced a year ago that it had hired an advisor to assist in the spinoff of $6.7 billion of credit card receivables. Target hoped to receive a portion of cash in the deal, as the rest would be paid to JP Morgan (NYSE: JPM) which owns a 47% stake in the portfolio. As a result of the delay, Target will pay JP Morgan $2.8 billion to cover receivables financing that was provided in 2008. Target said that the payment would result in a $0.08 cut to Q4 EPS.As a result of the recession, many customers paid off their credit card balances, dramatically decreasing the revenue that Target had made off interest payments. Target still plans to sell the portfolio, but will not engage in discussions with potential partners until later in the year. As a result of the sale, Target will focus more on developing its retail and online businesses, which face weak consumer demand and increased competition from Wal-Mart (NYSE: WMT) and Amazon (NASDAQ: AMZN).Target is one of many retailers who have struggled to adapt to the online enterprise model. As customers look to cut back on expenses such as gas, they are turning to the Internet as a more convenient way to have goods delivered straight to ...
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