“Credit” has apparently become a four-letter word in direct marketing. Following the credit woes of such marketers as Spiegel and Fingerhut, Sears, Roebuck & Co. is evaluating strategic alternatives for its credit and financial products business, including a sale.
Sears’s credit and financial products business manages the eighth largest credit-card portfolio in the U.S., with $30.8 billion in receivables at the end of 2002, representing approximately 25 million active accounts. The business has the nation’s largest in-house, proprietary card portfolio, with $18.4 billion in Sears Card receivables. The business generated more than $1.5 billion of comparable operating income in 2002.
The credit division, which Alan Lacy headed before becoming CEO of Sears in 2000, has long been a major earner for the company. In 2002, it accounted for roughly 60% of the retailer’s net income. But delinquent payments have become a growing problem.