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Analysts Debate Target's 'Pure Play' Prospects

MINNEAPOLIS-Some Wall Street analysts are concerned that it will not be clear sailing for Target Corp. without its department store divisions. One analyst predicts the sales will "expose" Target Stores as "lackluster growth vehicle."

By Jim McCartney | Updated on August 17, 2004

MINNEAPOLIS-Not all Wall Street analysts are excited about the prospects for Target Corp. to become a “pure play” in discount retailing. The locally based retailer recently completed the $3.2-billion sale of its Marshall Field’s division to May Department Stores and signed a $2.1-billion agreement to sell its Mervyn’s division late to a group of private investors, a deal that could be finalized this fall.

It’s a move that Wall Street investors have urged the company to do for more than a decade. But not everyone thinks the retailer will have clear sailing.

The transaction will “expose Target Stores for the lackluster growth vehicle we believe it has become,” says Eric Beder, a securities analyst at JB Hanauer & Co. He says Target faces some tough comparisons in the coming quarters, and will have a difficult time reaching its goal of a 15% earnings growth.

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