J.P. Morgan, Sears Canada Credit-Card Deal to End Next Year

By Judy McKinnon 

J.P. Morgan Chase & Co. will end its credit-card issuing deal with Sears Canada Inc. next November when the program is set to expire, the companies said Monday, marking another setback for the struggling Canadian retailer.

Toronto-based Sears, which has been working to reposition itself, said J.P. Morgan would continue to service the Sears Card and Sears MasterCard credit cards until Nov. 15, 2015.

The two plan to work together to explore a sale of the credit-card program. If a sale is reached, J.P. Morgan has agreed to pay up to 174 million Canadian dollars ($154 million) to the retailer under certain circumstances, the companies said.

The latest development comes just a month after the retailer's parent, Sears Holdings Corp., unveiled a plan to sell off most of its 51% stake in the Canadian unit to its shareholders by way of a rights offering. The Canadian retailer, whose chief executive resigned earlier this year after a year at the helm, has also faced competitive pressures from the entry of a number of large U.S. retailers into Canada in recent years.

The number of credit cards managed by J.P. Morgan under the Sears Canada program wasn't disclosed.

"Our customers will be able to continue to use their Sears Canada cards through to November 2015 and we expect no interruption, with the same service levels provided previously by J.P. Morgan Chase," Ron Boire, Sears Canada's acting chief executive, said in a statement Monday. "In the interim, we will explore options that will enable us to continue to provide the high level of service to which Sears Canada customers are accustomed."

Sears Canada sold its credit and financial services business to J.P. Morgan in 2005 for about C$2.2 billion.

Sears Canada will report its fiscal third-quarter results Tuesday.

Write to Judy McKinnon at [e-mail]

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