Sunday, May 29, 2011

Target Announces Canadian Store Locations. Kingston's Zellers to Close in 2013 & HBC to use Money to Revamp The Bay.

Target Corp. (NYSE: TGT) recently announced the list of its first 105 Canadian stores when it formally takes over for Zellers in 2013. Kingston's Cataraqui Town Centre Zellers will be involved in the first wave of store closures when it converts to the Target banner, as will 44 other Zellers locations in Ontario. The second wave of store conversions will be announced in September. 

In the next few days, Target will also pay HBC owner Richard Baker half of the $1.82 Billion price that is due for the 220 leases he sold to the American retailer. Money that Mr. Baker has stated will partially be used to revamp some of the corporation's struggling The Bay stores, and expand the successful Home Outfitters franchise into the United States.   

Many analysts have now begun speculating which American chain will be the next to make its Canadian foray. J.C. Penny (NYSE: JCP), Kohl's, (NYSE: KSS), and Macy's (NYSE: M) have all been mentioned, but it is doubtful any of them will make as large a splash as Target intends. Zellers was long viewed, and widely known, as a takeover candidate, but other Canadian chains are less obvious. 

As many investors know, the Canadian retail landscape is largely dominated by foreign enterprises and multinationals, but there are still a few companies, like Loblaw (TSE: L), Metro (TSE: MRU.A), etc. who own large amounts of valuable real-estate that could be sold to a hungry international retailing firm like Tesco from the UK. To be sure, Intelligent Investors must be mindful of the underlying value that some traditional Canadian firm's like Loblaw and Metro hold under their stores.

Happy Investing : )

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