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The Globe and Mail

Sobeys to supply Target's Canadian outlets

Deborah Baic/Deborah Baic/The Globe and Mail

U.S. retailer Target Corp. laid down more groundwork Friday for its entry into Canada in 2013 with additional store locations and a supply deal with Sobeys.

Under the Sobeys deal, the Canadian grocer will supply Target with frozen, dairy, and dry grocery products, including both national brands and Target's private label products starting early in 2013.

As part of the agreement, the two companies will use each other's distribution networks to help reduce transportation expenses.

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Target also announced 84 additional Zellers locations that it is entitled to under a $1.825-billion deal with the Hudson's Bay Co. that gave it up to 220 sites.

The retailer said that it has acquired leasehold interests for 29 of those locations of which the vast majority will become Target stores, while the remaining leases have been sold to other retailers or back to the landlords.

The 84 locations are in addition to 105 locations identified in May.

Target plans to open 125 to 135 stores in Canada, the majority of which will open in 2013, beginning in March.

The 84 locations announced Friday include the 39 locations for which Target has transferred the rights to Wal-Mart.

Target has also acquired the lease for one of Wal-Mart's vacant properties, which will open as a Target store.

Sobeys, a wholly owned subsidiary of Empire Company Ltd. , owns or franchises more than 1,300 stores across Canada under retail banners including Sobeys, IGA, Foodland, FreshCo, Price Chopper and Thrifty Foods, as well as Lawtons Drug Stores.

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Minneapolis-based Target is expected to open its first stores in Canada in 2013.

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