Consumer spending declined in the second quarter of the year, but that didn’t stop a major retailer from seeing its profits increase significantly.
Target, the second-biggest discount retailer in the U.S., posted a 14 percent profit in the second quarter of the year to meet analyst estimates, according to a report from Bloomberg. While the company’s net income rose to $679 million despite sales that were "softer than expected." The company said that the profits rose largely because more consumers used its store-branded credit cards when they did make purchases.
The company’s credit card unit saw profits double to $149 million last quarter, and not just because of the amount of credit card debt consumers took on with their cards. Instead, it strengthened its lending standards and saw the expenses from bad debt fall by more than half.
Consumer spending dropped across the country in the second quarter of the year as consumers made a more concerted effort to pay off their credit card debt. Almost all of the country’s largest lenders reported fewer delinquencies and charge offs.