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Sears Canada May Sell Credit Card Business

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Looking to increase shareholder value, and emphasis on its merchandising business, Sears Canada is exploring alternatives for its Credit and Financial Services business, including its possible sale.

Last year, this branch of the company generated about C$100 million of operating income. Sears Canada Bank extends credit to qualified customers through the Sears Card and Sears MasterCard.

Sears Canada May Sell Credit Card Business

According to a press release, the Sears Card is Canada’s largest in-house proprietary retail credit card portfolio with approximately C$2.3 billion in receivables as at April 2, 2005.

The Sears MasterCard portfolio had about C$200 million in receivables as of the same date. These cards together form the third largest credit card portfolio in Canada with nearly four million active accounts. According to Bloomberg News,

Sears Canada shares rose C$1.60 to C$22.26 in 10:01 a.m. trading on the Toronto Stock Exchange after earlier rising as high as C$22.30. It was the biggest gain since Feb. 9, when the shares rose 8.6 percent.

Sears Canada’s parent company, Sears Holdings Corp., sold its credit-card and financial-services division in 2003 to Citigroup Inc. for $3.4 billion.

“We believe that pursuing a strategic alternative in the current favourable market will maximize shareholder value,” said Brent Hollister, the company’s President and CEO. “In addition, the Credit and Financial Services business, operated by a strategic partner, can benefit from expanded growth opportunities while continuing to complement our merchandising business. Such action will also allow us to continue to focus on our ongoing strategic growth initiatives to increase the profitability of our merchandising operations.”

The company says that there will be no change in the manner in which Sears customers currently use their cards as alternatives are being reviewed.

“We expect no changes to a Sears Card Holder’s experience,” said Hollister. “Programs we have traditionally offered on the Sears Card, such as Sears Club and payment options for big-ticket merchandise, will continue to form part of our ongoing marketing initiatives and will be enhanced by additional product offerings and services.”

The Company’s review of strategic alternatives for the Credit and Financial Services business is expected to come to an end by the third quarter of 2005. The company hopes to implement any decisions before the end of the year.

Chris is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.

Sears Canada May Sell Credit Card Business
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