- Target Corp. will sell its 257 Mervyn’s department stores, plus four distribution centers, for $1.65 billion in cash to an investment group that includes Sun Capital Partners. Sales from these stores totaled about $3.3 billion in fiscal 2003.
Target announced that it expects a third-quarter pretax gain of about $270 million, or 18 cents per share, but that its per-share profit would fall by about 4 cents to 5 cents in the fourth quarter due to the loss of the Mervyn’s division. The company added that it would sell some $475 million of Mervyn’s credit-card receivables to GE Consumer Finance, according to Reuters.
- Krispy Kreme Doughnuts Inc. announced an informal investigation by the Securities and Exchange Commission into its repurchase of franchises. The franchisees at issue have included Krispy Kreme executives and other insiders, Reuters reported.
According to regulatory filings, the wire service reported, the company paid $33 million for franchise markets part owned by Philip Waugh, a former executive vice president of worldwide development who has since left the company; $67.5 million for markets whose franchisees included former Krispy Kreme director Joseph McAleer and emeritus director Steven Smith; and $16.8 million for the 33 percent stake it did not already own in a franchisee part owned by the ex-wife of Krispy Kreme chief executive officer Scott Livengood.