Target Q4 Card Profits Quadruple

Target Corp.’s credit card profits nearly quadrupled in the fiscal fourth quarter as the retailer wrote off fewer loans and socked away less to cover for future losses.

The Minneapolis-based retailer, which announced last month it was exploring a sale of its credit card receivables, on Feb. 24 said its card segment profit was $151 million for the quarter ended Jan. 29, up from $39 million a year earlier.

For all of 2010, profit rose 169% to $541 million.

Revenue fell 17% for the quarter to $384 million, caused by lower finance charges and late-fee revenue.

However, average receivables fell 15% in the quarter to $6.9 billion.

Target said it recorded a bad-debt expense of $83 million for the quarter, down 71% from a year earlier.

In January, the company said it hired First Annapolis Consulting to pursue a sale of its card receivables (see story). Target has said that if it sells the receivables, it plans to retain control of its card program. The company issues private-label credit cards and debit cards. It previously issued co-branded Visa-branded cards but stopped offering that program in April (see story).