Target income rises on fewer credit card charge offs
These days, it’s not just the nation’s largest financial institutions that are experiencing fewer instances of defaulted credit card debt. The nation’s second-largest discount retailer also saw a significant decrease in the number of accounts it charged off.
Target recently announced that it saw profits rise 2.7 percent in the quarter ending April 30, due largely to a extremely sharp drop in the number of store-branded credit card accounts it had to write off as uncollectable. The company’s loan loss provisions declined to just $12 million in the three-month span, down from more than $197 million in the same period a year prior.
“Our first-quarter financial performance was the result of stronger-than-expected profitability in our credit card segment, which offset the impact of weaker-than-anticipated sales in our retail segment,” said Gregg Steinhafel, Target’s chairman, president and CEO. He added that consumer spending had been “cautious” during the quarter.
Target also hoped to encourage more use of its store-issued debit and credit cards by offering consumers a 5 percent discount on any purchase made using these accounts.