Improved profitability in its credit card operations helped Target Corp. report its first gain in quarterly earnings Tuesday after two years of declines, despite another increase in delinquencies in its portfolio.
The Minneapolis retailer made $436 million, or 58 cents a share, in its fiscal third quarter, which ended Oct. 31, 18% more than a year earlier.
The credit card segment's profit surged 72% on improved portfolio performance that more than offset the impact of lower floating interest rates. Bad-debt expenses dropped 4.1%. The allowance for doubtful accounts rose 2.1% from the previous quarter, to $1.03 billion.
Accounts at least 60 days late grew to 6.5% of receivables, from 5.6% a year earlier and 5.8% in the previous quarter. The company's 90-day delinquency rate rose to 4.6%, from 3.8% and 4.1%, respectively.
Target sold a minority stake in its receivables to JPMorgan Chase & Co. last year.
