Sears Plans to Sell Ailing Credit-C

March 26, 2003

Sears, Roebuck & Co., like any consumer weighed down by big credit-card debt, is ready to throw away the plastic, Wednesday's Wall Street Journal reported.

The big retailer has decided to sell its massive credit-card business, which has been plagued in recent months by rising delinquencies and has threatened the company's efforts to turn around its retail business, said people familiar with the matter. The business includes both Sears's proprietary card and its MasterCard operation.

Sears hopes to fetch $6 billion to $7 billion for the unit, which carries $27 billion in debt, these people said. The company's board has been considering the move for about two months and hired Goldman Sachs Group Inc. to seek buyers for the business. An announcement is expected today.

Potential bidders are likely to include the nation's biggest credit-card issuers, including Citigroup Inc., Bank One Corp., and Bank of America Corp.

Although Sears is best known for selling Craftsman tools and Kenmore appliances, credit cards have been a big part of the company for 91 years. Last year, they represented 60%, or $1.5 billion, of the company's operating income. It was the eighth-largest U.S. credit-card portfolio, with $30.8 billion in card receivables at the end of 2002, representing 25 million active accounts.

A sale of the credit-card business would represent one of the most significant changes in the company's 117-year history.

Wall Street Journal Staff Reporters Robin Sidel, Amy Merrick and Joseph T. Hallinan contributed to this report