MINNEAPOLIS—Target has made its move to become an international retailer by agreeing with Hudson’s Bay Co. to purchase the leases of up to 220 Zellers stores in Canada.
Valued at $1.845 billion, the deal gives Target the leasehold interests in up to 200 sites currently operated by Zellers. It will put Target on track to open its first Canadian stores beginning in 2013, according to a Target statement. The company said it expects to open from 100 to 150 Target stores in 2013 and 2014 in Canada.
In addition, the company has assigned Michael Francis, chief marketing officer, to oversee Target’s entrance into Canada. Francis reports directly to Gregg Steinhafel, chairman, president and chief executive officer. In a conference call to retail industry analysts on Nov. 17, Steinhafel said Target was “monitoring opportunities in Puerto Rico and Canada.”
A statement from Hudson’s Bay said until Target is ready to open their stores, Zellers will sublease the properties back from Target when this deal is closed and continued to operate them as Zellers. The company also said it anticipates that a number of the remaining 59 Zellers locations “will be assigned to other retail enterprises,” while Zellers will continue to operate other Zellers stores “in specific communities” across Canada.
Richard Baker, Hudson’s Bay’s governor, said the deal “will allow us to invest substantial capital into our department-store and specialty-store businesses to continue to drive growth.” Along with The Bay department stores, Hudson’s Bay operates Home Outfitters, a kitchen, bed and bath specialty-store chain, and Fields, a chain of stores with value-priced merchandise.