Zellers stores across Canada will disappear in a couple of years, as major U.S. retailer Target moves in.
Target is spending $1.83 billion to buy up the leasehold interests in 220 Zellers stores from the storied Hudson’s Bay Company.
The deal appears to be a lucrative one for U.S. owner Richard Baker who bought the Hudson’s Bay Co. in 2008 for just $1.1 billion. “This transaction provides attractive long term value and will allow us to invest substantial capital into our department store and specialty store businesses to continue to drive growth,” said Baker in a release. Baker’s company NRDC Equity Partners also owns high-end fashion retailer Lord & Taylor.
Though Target said the Zellers brand won’t disappear immediately, the deal is the first step in a plan to open between 100 to 150 Target stores by 2013.
According to the Globe and Mail, the remaining Zellers stores will be auctioned off to other, potentially international retailers like Kohl’s and J.C. Penney.
Target, which helped coin the phrase “discount chic,” has long been exploring opportunities north of the border.
However it hit several roadblocks that run the gamut from unattractive real estate locations for potential stores to the economic slowdown that reined in consumer spending.
Target said that under the agreement Zellers will continue to lease the locations from Target and run them as Zellers stores “for a period of time.”
