Target Corp., had net write-offs in its credit card business of $161 million during the first quarter ended May 3, rising 62.6% from net write-offs of $99 million in the year-ago quarter, the retailer and issuer reported late Monday.
Net write-offs as a percentage of average receivables grew to 7.6% from 6.0% a year ago.
"As expected, net write-offs in the first quarter increased substantially," Target said in its 10-Q filing with the U.S. Securities and Exchange Commission. "This year-over-year change is due to two primary factors: the unsustainably strong performance in this metric in last year's first quarter, and the increased write-off activity concentrated in four states that have been particularly affected by housing-related weakness: Florida, Arizona, Nevada and California," the company stated.
Card accounts whose payments were 60+ days past due totaled 4.2% of period-end receivables, up from 3.2% in the same quarter last year, while accounts with payments more than 90 days delinquent rose to 2.9% from 2.1% in the same quarter last year.
In its filing, Target said it expects 60-plus day delinquency rates "to remain stable throughout 2008 at recent levels, in the range of 4%," and that its full-year net write-offs as a percentage of average receivables are likely to lie between 7% and 8% for the year.
The Minneapolis-based company held $8.42 billion in card receivables at May 3, up 29.3% from period-end receivables of $6.51 billion at May 5, 2007.
© 2008 CreditandCollectionsWorld.com and SourceMedia, Inc. All rights reserved
