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People focus on TGT’s credit stats relative to its history. But let’s also not forget to do so relative to bank card issuers. TGT’s charge-offs are getting better, but at a slightly lower rate than these peers. Delinquencies (better indicator of future charge-offs) are still rising, and at a slightly higher rate than peers.  Is this any reason to derail any thesis a bull might have on Target? We don’t think so. But it can’t be ignored either.

Target reported October Monthly Master Trust data this morning. Net charge-offs declined 88 bps vs. September to 13.49%. This compares with a 70 bps decline for the top six credit card bank-issuers. On an apples to apples basis, the magnitude of the improvement as a percentage was slightly smaller at Target: 6.1% vs. 7.0% for the bank card issuers.

Don’t Ignore TGT Credit - TGT NCO Oct 09

On the delinquency front, a more forward looking indicator, Target reported a rise in delinquencies of 36 bps vs. September to 9.34%. This compares with a 17 bps increase for the top six credit card bank-issuers. Again, looking at it on an apples to apples basis, the magnitude of the deterioration as a percentage was slightly larger at Target: 4.0% vs. 3.1% for the bank card issuers.

Don’t Ignore TGT Credit - TGT DQ Oct 09