Target To Expand Into Canada In Deal With Zellers

Target Corp. plans to expand into Canada, opening its first foreign outpost as it faces slower growth in the U.S.

The Minneapolis-based discount-store chain also said it hired an adviser to help sell its $6.7 billion credit-card receivables portfolio, an effort it first began to pursue before the credit crisis loomed and the recession hit.

Target, following other retailers looking outside their home markets for growth, plans to buy as many as 220 Zellers store leases from Canadian retailer Hudson's Bay Co. for $1.81 billion. With 279 stores, discount chain Zellers tried to retool itself as a fashionable alternative to Wal-Mart, whose low prices lured away a big portion of its customer base. Target said in the next eight months it will likely choose 100 to 150 of the former Zellers stores to operate as namesake stores.

"We are excited about the opportunity to enter the Canadian landscape and bring the Target brand to Canada," Target Chief Executive Gregg Steinhafel said in an interview from Toronto, where the company will build a main office.

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