Target: What Took You So Long?

NEW YORK ( TheStreet) -- Target ( TGT) is making two moves that the market has been eagerly awaiting -- expanding into Canada and attempting to sell its credit card business.

The discounter announced on Thursday that it will purchase Canadian retailer Zellers (known as the Target of Canada) for $1.8 billion. The company plans to open between 100 and 150 Target stores in the market by 2013. It will spend an additional $1 billion renovating the stores.

"One word, finally," says Wall Street Strategies analyst Brian Sozzi. "Not only is Target likely receiving locations where a comparable cheap chic approach to retailing has been tested, it finally is preparing to change the dialog of the company being a U.S. only retailer."

Zellers stores are 94,000 square feet, which will give Target small, more productive stores, which is in keeping with a new strategy being employed in the U.S. to develop smaller stores.

Target also said that it is hiring an advisor to consider the sale of its $6.7 billion credit-card receivables business, which has been under scrutiny over the past several years. The company attempted to sell off this division in 2007, but was unable to find a buyer once the economy turned sour.

This move will increase its liquidity, giving Target more leverage to expand internationally, Sozzi wrote in a note. "Assuming the receivables portfolio is sold, a higher margin business is removing as an offset to the core retail business that is experiencing a shift in fundamentals."

-- Written by Jeanine Poggi in New York.

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