Target Corp. (Minneapolis) told its investors that it is further tightening finance terms for its card holders — even those with good standing.
The mass-merchandise discounter, which announced a 7.6 percent drop in second-quarter profits in August and a September same-store sales fall-off of 3 percent, also said it would open new stores at a slower pace in fiscal 2009 and 2010. John Griffith, executive vp, property development, told the shareholder meeting that the company is planning to open 70 net stores next year. That’s below the company’s annual average of 90 to 100 stores.
Target reported that its net charge-off rate (the amount of loans written off as not being repaid compared with the size of the entire lending portfolio), rose to 10.1 percent in September and expects it to be around 9 percent for the year.
“This is a clearly challenging time,” said Terry Scully, president of Target Financial Services, citing higher credit card delinquencies in areas like California, Arizona, Florida and Nevada. “This economic stress has resulted in reduced profitability.”
According to The Associated Press, Target executives stressed that one of the top priorities was emphasizing the “pay less” part of its “expect more, pay less” slogan. The retailer said it will focus on price in its holiday advertising.