December 22, 2008
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News: Target Targeted with Charge-offs.
Battled by main competitor, Wal*Mart, Target is now confronted by Wall Street. Holding one of the worst positions in credit card charge-offs, the SEC (Securities and Exchange Commission) has listed this branded credit card issuer with a November charge-off rate of 11% (up from 10.2% in October). Of course, credit card delinquencies are up, as well.
Hampered by a decimated consumer-confidence index and a scared-shy credit card community, Target's sales were already way off. The new breed of shoppers have moved away from impulse and discretionary buying, which is going out the window due to spiraling poverty. When lost jobs don't return and benefits run out, about the only liquidity left comes from credit cards.
However, in these extreme times, even credit cards don't hold up for long. This is the lesson of Target in these hard times. Honest borrowers with good intensions have reached the end of their limits. Unbridled greed, coupled with an uncaring Whitehouse have given the termites free reign, as Main Street basked in bliss. All we can do now is survive and try to rebuild our country over the next few years. It's unfortunate for Target that almost half of their revenues were based on nonessentials when the nation, suddenly, has been forced into mainly necessity-based buying.
As far as operations, Target is considered to be well-run. Their merchandise is high-quality. While their branded credit cards have developed a loyal customer following and fared well for them in the past, the New World Dis-order of government deregulation is taking a major toll on the middle-class that are most of Target's survival. Target's work is ahead. They can shrink or go low-ball, but they'll have to change, in order to survive the worsening storms.