Sears Credit Drives Sears Profits

Speaking of card issuer profitability, Sears, Roebuck and Co also logged a stellar performance during the third quarter as card-related operating income rose to $385 million, a 21.8% increase over the same period in 1999. Sears card revenues were up just 1.7% from a year ago to $1.07 billion, while receivables declined about 2% to $25.5 billion. The big boost to profits came from declining loss rates: its chargeoff rate plummeted to 4.97% as compared to 6.39% one year earlier.

How important is Sears Credit to the company's total profits? Sears' company-wide operating income for the third quarter was $443 million. That means the credit division accounted for 87% of pretax earnings. The company's retail business earned only $44 million during the quarter.