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August 18, 2010

Cards unit helps Target to profit hike

A steep reduction in bad debt led to impressive results during the second quarter in the credit card business of US retailer Target. The credit card segment of the company saw profit jump to $149m compared with $63m during the second quarter of last year

By Verdict Staff

A steep reduction in bad debt led to impressive results during the second quarter in the credit card business of US retailer Target.

The credit card segment of the company saw profit jump to $149m compared with $63m during the second quarter of last year. Sales at the American discount chain store were up 3.8 percent on the same period last year.

In April this year, Target announced it would stop issuing its open-loop Visa-branded credit cards in favour of its own card brand after research showed guests spent more when using a Target credit card instead of a Target Visa. A spokesman said the move had no bearing on the first half results, and it would take time for the impact to impact the retailer’s bottom line.

“Our credit card segment enjoyed very strong results, as disciplined underwriting, superb execution and improving risk trends caused a sharp reduction in bad debt expense,” said Gregg Steinhafel Chairman, President and Chief Executive Officer of Target.

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