Target (TGT) To Sell Credit Card Debt To JP Morgan (JPM)

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In what could be a brilliant move if the recession and drop in retail sales worsen, Target (TGT) has agreed tot sell $3.6 billion of its credit card loan portfolio to JP Morgan (JPM). According to Bloomberg, the entire value of the Target consumer debt pool is $8.2 billion.

Target will probably use the capital for buying back shares and supporting expansion of new stores. The second of those programs would seem like a poor idea under current economic conditions.

Bloomberg writes "A sale will also help protect it as consumer credit declines and the U.S. economy moves closer to a recession."

Investors in Target will take almost any bone the company will throw them The retailer’s shares are off 8% during the last six months. Stock in rival Wal-Mart (WMT) is up 30%.

Douglas A. McIntyre