Credit Card Musical Chairs

BusinessWeek: Target's Credit-Card Sale: Bad Timing?
As recently as last November, Target (TGT) steadfastly said it had no intention of selling its $7 billion credit-card portfolio, one of the last ones held by a retailer. That changed late on Sept. 12, when the trendy discounter disclosed it would explore letting it go. The trouble is, Target is a little late to put out the for-sale sign.

Target's portfolio, which consists largely of its Target Visa receivables, has shown some of the most serious deterioration in credit quality of any major card company over the last year and a half....

There is precedent for such a sale. Sears (SHLD), Macy's (M), and Kohl's (KSS) all sold their card businesses at strong premiums between 2003 and 2006. Target and Nordstrom (JWN) are the last major retailers to underwrite their own card portfolios—others such as Wal-Mart Stores (WMT) contract with banks, who manage the cards and hold the risk.