How did Sears Credit do last year?
We had a
very successful year. We grew operating profits 8 percent to $1.1 billion,
excluding noncomparable items, largely by effectively addressing our bad
debt performance through improved collection activities and risk
management. We delivered strong free cash flow to the corporation to
reinvest in other growth initiatives at Sears. We were pleased to put our
problems with risk management and reaffirmation behind us. We also
improved our support of the growth initiatives of other Sears businesses
and put in place a solid infrastructure that supports quality growth of
credit. The only disappointment was a slowdown in receivables growth, due
in part to a reduced share of business transacted on Sears Card.
How do you plan to revitalize your receivables growth?
Card has been a dynamic product that has met the needs of a large number
of our customers very effectively. But clearly it hasn't met the needs of
all our customers. In 1999, we will take advantage of the flexibility our
new credit operations system provides us and introduce new Sears Card
features and reward programs that will better meet more customers' needs.
Examples will include access to better retail values and reward programs
that are tailored to customers' shopping behaviors.
Why does Sears have such a large and profitable credit business
compared with other retailers?
We've built a very successful and profitable credit business
partly because of our history of being a retailer of big-ticket durables,
where the ability to finance appliances, electronics and other major
purchases is important. We have done a good job of integrating the credit
product into the company's day-to-day promotional activities and have made
it convenient to open Sears Card accounts at the point of sale.
What role does Sears Credit play in Sears, Roebuck and
Credit has provided significant sales and promotional support
to the retail and services business by offering financing to consumers. In
addition, Sears Credit provides specific information and direct marketing
opportunities that improve the company's ability to develop and target
additional valuable promotions and offers to our most loyal customers.
Financially, Sears Credit is a very profitable business and provides a
source of earnings and cash flow that is unique to retail companies. This
allows us to implement Sears overall plans and investment strategies more