By George Anderson
Sears has agreed to sell its credit card business to Citigroup in a deal estimated to be $3 billion, according to a report from The Associated Press. Both companies expect the deal to close by the end of the year.
With the sale of its credit card business, Sears plans to focus all its attention on reinvigorating its retail business.
Standard & Poor's downgraded Sears' debt rating from BBB-plus to BBB after the deal was announced.
S&P analyst Gerald Hirschberg wrote, "The downgrade reflects the absence of this historically important foundation to the credit rating and its operating income (approximately $1.5 billion in 2002), and a greater reliance on a retailing business that has a very challenging future."
Moderator's Comment: What are your thoughts on Sears' sales of its credit card business?
Good news: Sears will have plenty of cash on hand from the sale.
Bad news: It will no longer be able to rely on its credit card business to prop up company results.
Good news: Sears will now be able to focus on its core retailing business.
(Potentially) Bad news: Sears will now be able to focus on its core retailing business. [George Anderson - Moderator]