NEW YORK — Target Corp. may be considering the acquisition of Canadian retailer Zellers, said A.G. Edwards & Sons analyst Robert Buchanan in a report to investors.
Target’s bid for Zellers could come as early as next month, Buchanan’s Canadian sources indicated.
“Soon to be flush with cash from the pending sale of Marshall Field’s and likely sale of Mervyn’s, Target is in a strong financial position to buy Zellers,” said Buchanan. “With Hudson’s Bay’s enterprise value just $921 million, we believe such a deal would be accretive over time, even taking a premium valuation for Zellers.”
Canada’s Hudson’s Bay Co. currently owns Zellers, which last year recorded operating profits of $91 million on $3.5 billion in sales. The retailer operates 312 stores encompassing 29 million square feet. Its stores are located throughout Canada, with concentrations in Ontario, Quebec and the western region.
Zellers would likely be a good fit for Target for both expansion and merchandising purposes, Buchanan noted.
“Having until now opted not to enter Canada, Target will at some point approach saturation in the U.S. vis-à-vis the general merchandise realm,” said Buchanan. “Like Target in the U.S., Canada’s Zellers is positioned as an upscale alternative to Wal-Mart, which ended last fiscal year operating 231 stores in Canada.”
Target currently operates 1,248 stores, including approximately 125 Super Targets.
Zellers management was unavailable for comment on a possible deal, Buchanan said, while Target’s executives were reached but declined to comment.
Despite its $3.5 billion in annual sales, Zellers has struggled for years, giving Hudson’s Bay added incentive to sell.
Target, meanwhile, struck a $3.24 billion deal with May Department Stores Co. for 62 Marshall Field’s stores and nine Mervyn’s locations, meaning its coffers will soon be very liquid. Moreover, Buchanan believes Target will eventually sell its remaining Mervyn’s stores for upward of $2 billion.
Buchanan reiterated his “buy-conservative” recommendation on Target shares with a 12- to 18-month price objective of $63.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty