More than half of the Target stores will be closed or converted to Kmart, with reductions in the support office along with restructuring & conversion costs.

Ord Minnett believes this is a decisive step to address the challenges in the Target business, which has arguably destroyed shareholder value under the Wesfarmers ownership.

The Target stores that will remain are unlikely to be suitable for a Kmart conversion so the broker suspects closure in the medium term is still possible.

Wesfarmers is taking a more judicious response to its lease tail rather than seeking to buy out leases. Lighten rating and $35 target.

Sector: Food & Staples Retailing.

Target price is $35.00.Current Price is $38.86. Difference: ($3.86) - (brackets indicate current price is over target). If WES meets the Ord Minnett target it will return approximately -11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2020 Acquisdata Pty Ltd., source FN Arena