GE Capital has agreed to buy J.C. Penney's private-label credit card portfolio and service facilities.
Under a 10-year agent bank agreement, the GE Card Services subsidiary will issue cards for the retailer and manage the portfolio. The transaction is expected to close by yearend.
In 1998, J.C. Penney had credit card sales of $7.8 billion and 35 million store-issued accounts. The retailer has 11 credit card service facilities in 10 U.S. cities and Puerto Rico. Upon closing, GE Capital will assume operations of all facilities using the same employees.
Edward D. Stewart, president and chief executive officer of GE Card Services, said, "The J.C. Penney card will be strengthened with expanded promotional offers to customers, more favorable repayment terms, a multimillion-dollar relaunch, and on-line support for all J.C. Penney products and services."
Penney chairman and CEO James E. Oesterreicher said, "By selling the receivables portfolio, we will free up substantial cash to reduce debt and strengthen our balance sheet, and outsourcing the credit card operation will permit management's attention to be focused exclusively on our core business activities."