1 Big Risk for Macy's Shareholders
For many years, Macy's (NYSE: M) store-brand credit card has been a huge contributor to the department store giant's financial performance. In fiscal 2019, net credit card revenue totaled $771 million, accounting for more than half of the company's adjusted operating income. Last year, Macy's recorded $751 million of net credit card revenue, despite the pandemic's impact.
However, Citigroup -- the company's credit card partner -- recently exercised an option to terminate its contract with the retailer ahead of schedule. That creates a ton of uncertainty for shareholders that won't be resolved until the two sides negotiate a new contract or Macy's chooses a new credit card partner.
A Citibank affiliate (Department Stores National Bank) issues credit cards on behalf of Macy's and its upscale Bloomingdale's brand. These include a simple store credit card that can only be used at Macy's and a co-branded American Express card that can be used with any merchant that accepts AmEx. Macy's and Bloomingdale's-branded cards account for 40% to 50% of spending at the retailer in a typical year.
Source Fool.com
