HomeAnálisis De MercadoEconomíaUS department stores see higher credit delinquencies amid strained spending By Reuters

US department stores see higher credit delinquencies amid strained spending By Reuters


By Katherine Masters and Ananya Mariam Rajesh

(Reuters) – Major U.S. department stores including Macy’s (NYSE:) and Nordstrom (NYSE:) are flagging delays in store credit card repayments, another risk to revenues as consumers pull back from discretionary spending ahead of the crucial holiday shopping season.

Macy’s executives disclosed on Tuesday that rising delinquencies cut credit card revenues to $120 million in the second quarter, down $84 million from the previous quarter. While Nordstrom’s credit card revenues rose 10% in the first half of this year, company executives said Tuesday that delinquencies are now above pre-pandemic levels and could “result in higher credit losses in the second half and into 2024.”

In an earnings call on Wednesday, Kohl’s (NYSE:) said “other revenue,” which is primarily its credit business, declined 3% in the second quarter, sharply down from 11% in the first quarter. The company also announced a new co-branded credit card with Capital One in a bid to attract more customers to its credit segment.

U.S. department stores have long offered store credit cards, which often provide savings or points on purchases, as a way to capture sales and grow revenue. However, those cards are typically riskier than traditional credit cards, with higher interest rates and lower credit limits, according to credit reporting consultant John Ulzheimer.

Macy’s credit card, for example, has an annual percentage of 31.99% while the national average is 22.39%, according to an August report by WalletHub. Those high interest rates, combined with laxer credit score thresholds, make it more likely that higher-risk consumers will sign up for store cards, according to Ulzheimer.

While consumer spending remains relatively resilient according to U.S. retail sales data, investors and experts say rising delinquincies could signal growing pressure on some consumers. The percentage of delinquent payers rose by 23.1% to 38.2% between the second quarters of 2022 and 2023, with the biggest change among consumers in their 40s and 50s, according to data from the Federal Reserve Bank of St. Louis.

Declining payment rates could be “an early sign that consumption is getting weaker,” said FRED economist and vice president Juan M. Sánchez. Delinquency rates are currently highest among young consumers in their 20s and 30s and those in more economically distressed zip codes.

Defaults in credit payments mean department stores are now assuming higher bad debt and write-offs for the year as spending remains pressured in the United States.

“For stressed consumers, store cards are one of the first things they may be late or renege on before regular credit cards, car payments, and mortgages which they consider more important,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.


Reciba noticias de Vimilin desde Google news


Please enter your comment!
Please enter your name here


BTC price shows ‘textbook’ Wyckoff moves as Bitcoin bulls defend $25K

Bitcoin (BTC) consolidated higher on Sept. 15 as analysis described recent BTC price behavior as “textbook.”Collect this article as an NFT to preserve this moment...

Magic Eden integrates Solana’s compressed NFTs into marketplace

Nonfungible token (NFT) marketplace Magic Eden has announced that it will support Solana’s compressed NFTs (cNFTs) to provide a cost-efficient and scalable alternative to owning...

House Democrats back Biden candidacy as calls for president to drop out intensify on the left

FIRST ON FOX: House Democrats appear to be behind another Biden-Harris ticket, even as President Biden is being discouraged against running by some on the...

3 Standout Stocks to Buy as Worse-Than-Expected CPI Numbers Revive Inflation Fears

The August CPI report showed headline annual inflation rising 3.7% compared to the 3.2% reading seen in July and a 3.0% increase in June. As inflation...

Más popular