Target (NYSE: TGT) has one of the few lending businesses that is expanding. According to The Wall Street Journal, "At the end of Target's fiscal fourth quarter, which ended Feb. 2, the company had $8.62 billion of loans outstanding on its Visa cards."
That is a boat-load of money. But Target is not immune to the larger forces in the economy. The Journal quotes William Ryan, consumer-credit analyst at Portales Partners, as saying, "Target appears to have pursued very aggressive credit growth at the wrong time."
The question is why should Target be any different from American Express (NYSE: AXP) or any other credit card company? Economic data show that consumer defaults on home loans, car loans, and credit cards are rising quickly in most segments of the economy and that even well-to-do consumers are having trouble making ends meet.
Target's next earnings report may not look so great. The retailer's stock is up this year, but that can always be fixed.
Douglas A. McIntyre is an editor at 247wallst.com.
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