Target Corp. is temporarily suspending its efforts to sell the portfolio that handles the balances credit cardholders owe the company, but plans to resume the talks with potential buyers later this year.
The Minneapolis company announced about a year ago that it would actively try to sell the portfolio and had thought that it would likely reach a deal in late 2011 or early 2012.
But with the temporary suspension of talks, Target now foresees a transaction potentially taking place late this year or in early 2013, which would be a year later than they initially thought that a transaction would occur.
Its shares fell 88 cents, or 1.8 percent, to $49 in morning trading Wednesday,
The retailer also said that it will pay about $2.8 billion to JPMorgan Chase subsidiary Chase Card Services to retire receivables financing from 2008. That payment, along with a premium, is expected to reduce its fourth-quarter earnings by about 8 cents per share. Target expects to recoup some or all of the cost of the premium through lower expected interest expense in 2012 and 2013.
Target is choosing now to retire the financing because the option to take such action expires at the end of the month.
The company says that it still wants to sell its credit card receivables portfolio on "appropriate terms," and that it wasn't in its best interests to complete a deal now. Target says it will likely restart talks with a limited number of potential partners later in the year.
The retailer hopes by pausing talks and repaying the Chase financing that it will be able to get a deal and sell the portfolio to a financial partner.
Target, which has 1,767 stores in the U.S., announced last week that it will team up with unique specialty shops to offer limited edition merchandise. It also confirmed reports that it will test expanded displays of Apple products in 25 stores.
Wife of US Pastor Held in Iran: 'I Never Thought I’d Have to Battle My Own Gov't For My Husband’s Freedom' | Leah Barkoukis
Politifact: On Second Thought, Obama's 'Keep Your Plan' Pledge is 2013's 'Lie of the Year' | Guy Benson
Conservatives Clash as House Prepares to Vote on Ryan-Murray Budget Deal -- UPDATE: House passes 332-94 | Guy Benson
New White House Push: Sign Up For Obamacare Because It Will Give Your Mother "Piece of Mind" | Daniel Doherty
Heartbreaking: Dad Gives Up Trying to Obtain Health Insurance For His Ailing Son on the Exchanges | Daniel Doherty