Target Corp First Quarter 2009 Earnings Release
By Zarana on Friday, May 29 2009
General merchandise and food discount retailer Target Corp. (NYSE: TGT) on May 20, 2009 reported a 13.4% decline in profit for the first quarter from the year-ago period, hurt by the slowdown in consumer spending. However, its credit-card segment results were profitable.
Gregg Steinhafel, chairman, president and chief executive officer of Target said “Our first quarter earnings per share reflect disciplined execution of our strategy in a difficult environment. Credit card segment results for the first quarter were stable, profitable and consistent with our expectations. Very importantly, we believe this improved stability and predictability in key aspects of both our retail and credit card segments reflects the resilience of our strategy and underscores our ability to generate substantial value for our shareholders over time.”
For the credit card segment, average credit card receivables in the quarter increased $249 million, or 3.0%, from the first quarter of 2008, and quarter-end receivables increased $37 million, or 0.4%, from the same period a year ago.
Credit card segment profit in the quarter declined to $39 million from $181 million last year. The drop in profit is a result of a combination of several factors such as decline in the spread to LIBOR from 6.5% in first quarter 2008 to 2.5% this quarter, 6% YOY decrease in total revenues and 35% YOY increase in expenses.
As expected, net write-offs in the quarter were $301 million which was $161 million in first quarter of 2008. That is 88% of YOY increase. Similarly Delinquencies have risen to owing to the credit crunch in the market.
Target has been implementing several cost saving measures, which includes freezing salary hikes for senior management, suspending buybacks, tightening credit card underwriting and credit granting.