Canadian Tire Corp. credit card write-offs are falling and should return to normal next year, says Keith Howlett, Desjardins Securities analyst.
For December, the well-known retailer said its net credit write-off rate fell to 7.67%, down from 8.1% in November and 8.28% in October.
"Subject to the state of consumers' finances after the holiday-spending period, write-offs appear to have peaked in 3Q09," said Mr. Howlett.
"It appears not unlikely that Canadian Tire may return to its target write-off rate (securitized and on-balance sheet) of 5-6% sometime during 2011."
Mr. Howlett said expect all of Canadian Tire's divisions, except petroleum, to have had lower year-over-year EPS in the fourth quarter of 2009. He maintained his Hold rating and $57 price target on the stock.