The largest remaining retailer-issued credit card may find itself on the auction block, according to news reports. Target announced that it intended to sell its consumer lending portfolio, including its distinctive Red Card store accounts and Red Card Visa credit card accounts.
Company officials claim the sale would allow managers to focus more closely on store operations and on market share growth in the years ahead. Wall Street analysts noted that unloading as much as $6.7 billion in consumer debt would significantly reduce the company's long-term risk.
Target has built a reputation for offering Red Card store accounts to consumers with limited credit histories and to consumers attempting to repair their credit. Company officials declined to speculate on whether a third-party lender would continue to offer the same kind of lenient account approvals, or whether credit card payments would continue to be accepted at stores after the portfolio's sale.
In recent years, many retailers have outsourced their credit card operations to white label lenders such as GE Money Bank and HSBC. Target's departure from direct-to-consumer lending leaves Nordstrom as the highest profile retailer that still operates its own charge account program.