Macy's Inc. announced the repurchase of $500 million of debt maturing in the next three years and announced a credit-card co-branding deal with American Express Co.
The department-store giant will replace existing store cards branded by Visa Inc. with American Express ones by year's end. The Macy's and Bloomingdale's cards will continue to be issued by Citigroup Inc.
American Express is both a card issuer and transaction processor. The lending business was a particular bane for the company during the recession, but loan woes may have peaked last year for the company.
Macy's, meanwhile, has seen sales brighten in recent months like many other retailers have. The resulting increase in cash flow helped allow the company to repurchase the senior notes for $526 million, including deal-related expenses. As a result, Macy's will book $27 million in costs for its fiscal first quarter, which should be offset by lower interest costs. For the year, interest costs should be reduced by $15 million by the repurchase.